<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1999
REGISTRATION NO. 333-29721
811-8265
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 6 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
AMENDMENT NO. 7 [X]
---------------------
MORGAN STANLEY DEAN WITTER
S&P 500 INDEX FUND
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------
COPY TO:
STUART M. STRAUSS, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
---------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X immediately upon filing pursuant to paragraph (b)
-----
on October 29, 1999 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)
----
on (date) pursuant to paragraph (a) of rule 485.
----
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS - OCTOBER 29, 1999
Morgan Stanley Dean Witter
S&P 500 INDEX FUND
[Graphic Omitted]
A MUTUAL FUND THAT SEEKS TO PROVIDE INVESTMENT RESULTS THAT,
BEFORE EXPENSES, CORRESPOND TO THE TOTAL RETURN (I.E., THE
COMBINATION OF CAPITAL CHANGES AND INCOME) OF THE STANDARD &
POOR'S (REGISTERED TRADEMARK) 500 COMPOSITE STOCK PRICE
INDEX
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
The Fund Investment Objective 1
Principal Investment Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Additional Investment Strategy Information 5
Additional Risk Information 6
Fund Management 7
Shareholder Information Pricing Fund Shares 8
How to Buy Shares 8
How to Exchange Shares 10
How to Sell Shares 12
Distributions 14
Tax Consequences 14
Share Class Arrangements 15
Financial Highlights ............................................ 23
Our Family of Funds ................................. Inside Back Cover
This Prospectus contains important information about
the Fund. Please read it carefully and keep it for
future reference.
</TABLE>
<PAGE>
THE FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------
Morgan Stanley Dean Witter S&P 500 Index Fund seeks to provide investment
results that, before expenses, correspond to the total return (i.e., the
combination of capital changes and income) of the Standard & Poor's (Registered
Trademark) 500 Composite Stock Price Index.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------
{sidebar}
TOTAL RETURN
An investment objective having the goal of selecting securities with the
potential to rise in price and pay out income.
{end sidebar}
The Fund will normally invest at least 80% of its total assets in common stocks
of companies included in the S&P 500 Index. The "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., "passively" manages the Fund's assets by
investing in stocks in approximately the same proportion as they are represented
in the Index. For example, if the common stock of a specific company represents
five percent of the Index, the Investment Manager typically will invest the same
percentage of the Fund's assets in that stock. The S&P 500 Index is a well-known
stock market index that includes common stocks of 500 companies representing a
significant portion of the market value of all common stocks publicly traded in
the United States. The Fund may invest in foreign companies that are included in
the S&P 500 Index.
The Investment Manager seeks a correlation between the performance of the Fund,
before expenses, and that of the S&P 500 Index of 95% or better. A figure of
100% would indicate perfect correlation.
Common stock is a share ownership or equity interest in a corporation. It may or
may not pay dividends, as some companies reinvest all of their profits back into
their businesses, while others pay out some of their profits to shareholders as
dividends.
In addition, the Fund may invest in stock index futures on the S&P 500 Index,
and Standard & Poor's Depository Receipts ("SPDRs").
In pursuing the Fund's investment objective, the Investment Manager has
considerable leeway in deciding which trading strategies it uses. For example,
the Investment Manager in its discretion may determine to use some permitted
trading strategies while not using others.
"Standard & Poor's (Registered Trademark)," "S&P (Registered Trademark)," "S&P
500 (Registered Trademark)," "Standard & Poor's 500," and "500" are trademarks
of The McGraw-Hill Companies, Inc. and have been licensed for use by the Fund.
The Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P makes no
representation regarding the advisability of investing in the Fund.
1
<PAGE>
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- ---------------
There is no assurance that the Fund will achieve its investment objective. The
Fund's share price will fluctuate with changes in the market value of the Fund's
portfolio securities. When you sell Fund shares, they may be worth less than
what you paid for them and, accordingly, you can lose money investing in this
Fund.
A principal risk of investing in the Fund is associated with its common stock
investments. In general, stock values fluctuate in response to activities
specific to the issuer, as well as general market, economic and political
conditions. Stock prices can fluctuate widely in response to these factors.
Another risk of investing in the Fund arises from its operation as a "passively"
managed index fund. As such, the adverse performance of a particular stock
ordinarily will not result in the elimination of the stock from the Fund's
portfolio. The Fund will remain invested in common stocks even when stock prices
are generally falling. Ordinarily, the Investment Manager will not sell the
Fund's portfolio securities except to reflect additions or deletions of the
stocks that comprise the S&P 500 Index, or as may be necessary to raise cash to
pay Fund shareholders who sell Fund shares.
The performance of the S&P 500 Index is a hypothetical number which does not
take into account brokerage commissions and other transaction costs, custody and
other costs which will be borne by the Fund (e.g., management fee, transfer
agency and accounting costs).
The Fund's ability to correlate its performance, before expenses, with the S&P
500 Index may be affected by, among other things, changes in securities markets,
the manner in which the S&P 500 is calculated and the timing of purchases and
sales. The Fund's ability to correlate its performance to the Index also depends
to some extent on the size of the Fund's portfolio, the size of cash flows into
and out of the Fund and differences between how and when the Fund and the Index
are valued. The Investment Manager regularly monitors the correlation and, in
the event the desired correlation is not achieved, the Investment Manager will
determine what additional investment changes may need to be made.
The performance of the Fund also will depend on whether the Investment Manager
is successful in pursuing the Fund's investment strategy, including the
Investment Manager's ability to manage cash flows (primarily from purchases and
sales, and distributions from the Fund's investments). The Fund is also subject
to other risks from its other permissible investments including risks associated
with stock index futures, SPDRs and foreign securities. For more information
about these risks, see the "Additional Risk Information" section.
Shares of the Fund are not bank deposits and are not guaranteed or insured by
the FDIC or any other government agency.
2
<PAGE>
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------
The bar chart and table below provide some indication of the risks of investing
in the Fund. The Fund's past performance does not indicate how the Fund will
perform in the future.
{sidebar}
ANNUAL TOTAL RETURNS
This chart shows the performance of the Fund's Class B shares over the past
calendar year.
{end sidebar}
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
26.84%
1998
The bar chart reflects the performance of Class B shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.
Year-to-date total return as of September 30, 1999 was 4.07%.
During the periods shown in the bar chart, the highest return for a calendar
quarter was 21.06% (quarter ended December 31, 1998), and the lowest return for
a calendar quarter was -10.26% (quarter ended September 30, 1998).
{sidebar}
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual returns with those of a broad
measure of market performance over time as well as with an index of funds with
similar investment objectives. The Fund's returns include the maximum
applicable sales charge for each Class and assume you sold your shares at the
end of each period.
{end sidebar}
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>
LIFE OF FUND
PAST 1 YEAR (SINCE 9/26/97)
<S> <C> <C>
Class A 21.19% 19.17%
Class B 21.84% 20.37%
Class C 25.86% 23.38%
Class D 28.18% 24.63%
S&P Index(1) 28.58% 25.04%
Lipper S&P 500 Fund Index(2) 28.34% 24.84%
</TABLE>
1 The Standard & Poor's (Registered Trademark) 500 Stock Price Index is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
2 The Lipper S&P 500 Fund Index is an equally-weighted performance index of
the largest qualifying funds (based on net assets) in the Lipper S&P 500
Index Funds objective. The Index, which is adjusted for capital gains
distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 10 funds represented in this
Index.
3
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund offers four classes of shares: Classes
A, B, C and D. Each Class has a different combination of fees, expenses and
other features. The Fund does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and expense information.
{sidebar}
SHAREHOLDER FEES
These fees are paid directly from your investment.
{end sidebar}
{sidebar}
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted
from the Fund's assets and
are based on expenses paid
for the fiscal year ended
August 31, 1999.
{end sidebar}
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) 5.25%(1) None None None
Maximum deferred sales charge (load) (as a
percentage based on the lesser of the offering
price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None
ANNUAL FUND OPERATING EXPENSES
Management fee 0.31% 0.31% 0.31% 0.31%
Distribution and service (12b-1) fees 0.23% 1.00% 1.00% None
Other expenses 0.19% 0.19% 0.19% 0.19%
Total annual Fund operating expenses(5) 0.73% 1.50% 1.50% 0.50%
</TABLE>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the time of purchase
are subject to a contingent deferred sales charge ("CDSC") of 1.00% that
will be imposed if you sell your shares within one year after purchase,
except for certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.
4 Only applicable if you sell your shares within one year after purchase.
5 The Investment Manager has agreed to assume all expenses (except for
brokerage and 12b-1 fees) and to waive the compensation provided for in its
Investment Management Agreement to the extent that such expenses and
compensation on an annualized basis exceed 0.50% of the daily net assets of
the Fund and will continue to do so on a permanent basis. The fees and
expenses disclosed above reflect the assumption of such expenses and waiver
of compensation by the Investment Manager to the extent that such expenses
and compensation on an annualized basis exceed 0.50% of the daily net assets
of the Fund.
4
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, the tables below show your costs at
the end of each period based on these assumptions depending upon whether or not
you sell your shares at the end of each period.
<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
- --------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------- ------------------------------------------
CLASS A $596 $746 $910 $1,384 $596 $746 $910 $1,384
- --------------------------------------------------- ------------------------------------------
CLASS B $653 $774 $1,018 $1,791 $153 $474 $818 $1,791
- --------------------------------------------------- ------------------------------------------
CLASS C $253 $474 $818 $1,791 $153 $474 $818 $1,791
- --------------------------------------------------- ------------------------------------------
CLASS D $51 $160 $280 $628 $51 $160 $280 $628
- --------------------------------------------------- ------------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more in sales charges,
including distribution fees, than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers.
[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ------------------------------------------
This section provides additional information relating to the Fund's principal
strategies.
Stock Index Futures. The Fund may invest in stock index futures with respect to
the S&P 500 Index. Stock index futures may be used to simulate investment in the
S&P 500 while retaining a cash balance for fund management purposes, to
facilitate trading, to reduce transaction costs or to seek higher investment
returns.
SPDRs. The Fund may invest in securities referred to as SPDRs (known as
"spiders") that are designed to track the S&P 500 Index. SPDRs represent an
ownership interest in the SPDR Trust, which holds a portfolio of common stocks
that closely tracks the price performance and dividend yield of the S&P 500
Index. SPDRs trade on the American Stock Exchange like shares of common stock.
The percentage limitations relating to the composition of the Fund's portfolio
apply at the time the Fund acquires an investment and refer to the Fund's net
assets, unless otherwise noted. Subsequent percentage changes that result from
market fluctuations will not require the Fund to sell any portfolio security.
The Fund may change its principal investment strategies without shareholder
approval; however, you would be notified of any changes.
5
<PAGE>
[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
- ---------------------------
This section provides additional information relating to the principal risks of
investing in the Fund.
Foreign Securities. The Fund's investments in the common stocks of foreign
corporations (including American Depository Receipts) may involve risks in
addition to the risks associated with domestic securities. Foreign securities
are affected by changes in currency rates. U.S. dollars are generally converted
to the local currency to purchase a foreign security. Foreign securities also
have risks related to political and economic developments abroad. Foreign
companies, in general, are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available information about
these companies. Moreover, foreign accounting, auditing and financial reporting
standards generally are different from those applicable to U.S. companies.
Futures. If the Fund invests in futures, its participation in these markets
would subject the Fund's portfolio to certain risks. The Investment Manager's
predictions of movements in the direction of the stock market may be inaccurate,
and the adverse consequences to the Fund (e.g., a reduction in the Fund's net
asset value or a reduction in the amount of income available for distribution)
may leave the Fund in a worse position than if these strategies were not used.
Other risks inherent in the use of futures include, for example, the possible
imperfect correlation between the price of futures contracts and movements in
the prices of the securities.
SPDRs. SPDRs, which the Fund may hold, have many of the same risks as direct
investments in common stocks. The market value of SPDRs is expected to rise and
fall as the S&P 500 Index rises and falls. If the Fund invests in SPDRs, it
would, in addition to its own expenses, indirectly bear its ratable share of the
SPDR's expenses.
Year 2000. The Fund could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the Fund's
other service providers and the markets and corporate and governmental issuers
in which the Fund invests do not properly process and calculate date-related
information from and after January 1, 2000. While year 2000-related computer
problems could have a negative effect on the Fund, the Investment Manager and
its affiliates are working hard to avoid any problems and to obtain assurances
from their service providers, market participants and individual governmental
issuers that they are taking similar steps.
In addition, it is possible that the markets for securities in which the Fund
invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by
6
<PAGE>
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected.
[GRAPHIC OMITTED]
FUND MANAGEMENT
- ---------------
{sidebar}
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, has more than $134 billion in assets under
management or administration as of September 30, 1999.
{end sidebar}
The Fund has retained the Investment Manager -- Morgan Stanley Dean Witter
Advisors Inc. -- to provide administrative services, manage its business affairs
and invest its assets, including the placing of orders for the purchase and sale
of portfolio securities. The Investment Manager is a wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co., a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services. Its main business office is
located at Two World Trade Center, New York, NY 10048.
The Fund's portfolio is managed within the Investment Manager's Growth and
Income Group. Guy G. Rutherfurd, Jr., Senior Vice President of the Investment
Manager, is the primary portfolio manager of the Fund. Mr. Rutherfurd has been a
portfolio manager with the Investment Manager since February 1997. Prior to
joining the Investment Manager, Mr. Rutherfurd was Executive Vice President and
Chief Investment Officer of Nomura Asset Management (U.S.A.). Mr. Rutherfurd is
assisted by Kevin Jung, a Vice President of the Investment Manager since
September 1997. Prior to joining the Investment Manager, Mr. Jung was a
portfolio manager with UBS Asset Management Inc.
The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for Fund
expenses assumed by the Investment Manager calculated daily by applying the
annual rate of 0.40% to the Fund's average daily net assets. The fee is based on
the Fund's average daily net assets. The Investment Manager has agreed, under
its Management Agreement with the Fund, to assume the Fund's operating expenses
(except for brokerage and 12b-1 fees) to the extent such operating expenses
exceed on an annualized basis 0.50% of the average daily net assets of the Fund,
which may reduce the investment management fee below 0.40% of the Fund's average
daily net assets. For example, if "other expenses" are 0.40% of the Fund's
average daily net assets, then the investment management fee rate paid by the
Fund would equal 0.10% of the Fund's average daily net
7
<PAGE>
assets. Alternatively, if "other expenses" were to decline to 0.30% of the
Fund's average daily net assets, the investment management fee paid by the Fund
would equal 0.20% of the Fund's average daily net assets. For the fiscal year
ended August 31, 1999, the Fund accrued total compensation to the Investment
Manager amounting to 0.31% of the Fund's average daily net assets.
8
<PAGE>
SHAREHOLDER INFORMATION
[GRAPHIC OMITTED]
PRICING FUND SHARES
- -------------------
The price of Fund shares (excluding sales charges), called "net asset value," is
based on the value of the Fund's portfolio securities. While the assets of each
Class are invested in a single portfolio of securities, the net asset value of
each Class will differ because the Classes have different ongoing distribution
fees.
The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time, on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.
The value of the Fund's portfolio securities is based on the securities' market
price when available. When a market price is not readily available, including
circumstances under which the Investment Manager determines that a security's
market price is not accurate, a portfolio security is valued at its fair value,
as determined under procedures established by the Fund's Board of Trustees. In
these cases, the Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price.
An exception to the Fund's general policy of using market prices concerns its
short-term debt portfolio securities. Debt securities with remaining maturities
of sixty days or less at the time of purchase are valued at amortized cost.
However, if the cost does not reflect the securities' market value, these
securities will be valued at their fair value.
[GRAPHIC OMITTED]
HOW TO BUY SHARES
- -----------------
{sidebar}
CONTACTING A
FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at: www.msdw.com/individual/funds
{end sidebar}
You may open a new account to buy Fund shares or buy additional Fund shares for
an existing account by contacting your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative. Your Financial Advisor
will assist you, step-by-step, with the procedures to invest in the Fund. You
may also purchase shares directly by calling the Fund's transfer agent and
requesting an application.
Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes A,
B, C and D. Class D shares are only offered to a limited group of investors.
Each Class of shares offers a distinct structure of sales charges, distribution
and service fees, and other features that are designed to address a variety of
needs. Your Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When purchasing
Fund shares, you must specify which Class of shares you wish to purchase.
9
<PAGE>
When you buy Fund shares, the shares are purchased at the next share price
calculated, (less any applicable front-end sales charge for Class A shares),
after we receive your purchase order. Your payment is due on the third business
day after you place your purchase order. We reserve the right to reject any
order for the purchase of Fund shares.
{sidebar}
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
{end sidebar}
MINIMUM INVESTMENT AMOUNTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
--------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Regular Accounts $1,000 $100
- -------------------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
- -------------------------------------------------------------------------------------------------------------
EasyInvest(SM)
(Automatically from your checking or savings account or
Money Market Fund) $100* $100*
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.
Investment Options for Certain Institutional and Other Investors/Class D Shares.
To be eligible to purchase Class D shares, you must qualify under one of the
investor categories specified in the "Share Class Arrangements" section of this
Prospectus.
Subsequent Investments Sent Directly to the Fund. In addition to buying
additional Fund shares for an existing account by contacting your Morgan Stanley
Dean Witter Financial Advisor, you may send a check directly to the Fund. To buy
additional shares in this manner:
o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, the Class of shares you wish to purchase, and the investment amount
(which would include any applicable front-end sales charge). The letter must
be signed by the account owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean Witter
S&P 500 Index Fund.
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O.
Box 1040, Jersey City, NJ 07303.
10
<PAGE>
[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
- ----------------------
Permissible Fund Exchanges. You may exchange shares of any Class of the Fund for
the same Class of any other continuously offered Multi-Class Fund, or for shares
of a No-Load Fund, a Money Market Fund, North American Government Income Trust
or Short-Term U.S. Treasury Trust, without the imposition of an exchange fee.
See the inside back cover of this Prospectus for each Morgan Stanley Dean Witter
Fund's designation as a Multi-Class Fund, No-Load Fund or Money Market Fund. If
a Morgan Stanley Dean Witter Fund is not listed, consult the inside back cover
of that Fund's Prospectus for its designation. For purposes of exchanges, shares
of FSC Funds (subject to a front-end sales charge) are treated as Class A shares
of a Multi-Class Fund. Since exchanges are available only into continuously
offered Morgan Stanley Dean Witter Funds, exchanges are not available into any
new Morgan Stanley Dean Witter Fund during its initial offering period, or when
shares of a particular Morgan Stanley Dean Witter Fund are not being offered for
purchase.
Exchanges may be made after shares of the Fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current Prospectus for each
fund describes its investment objective(s), policies and investment minimum, and
should be read before investment.
Exchange Procedures. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB -- and
then write the transfer agent or call (800) 869-NEWS to place an exchange order.
You can obtain an exchange privilege authorization form by contacting your
Financial Advisor or other authorized financial representative or by calling
(800) 869-NEWS. If you hold share certificates, no exchanges may be processed
until we have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund)
is made on the basis of the next calculated net asset values of the Funds
involved after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next calculated net asset
value and the Money Market Fund's shares are purchased at their net asset value
on the following business day.
The Fund may terminate or revise the exchange privilege upon required notice.
The check writing privilege is not available for Money Market Fund shares you
acquire in an exchange.
Telephone Exchanges. For your protection when calling Morgan Stanley Dean Witter
Trust FSB, we will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. These procedures may
include
11
<PAGE>
requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number. Telephone
instructions also may be recorded.
Telephone instructions will be accepted if received by the Fund's transfer agent
between 9:00 a.m. and 4:00 p.m. Eastern time, on any day the New York Stock
Exchange is open for business. During periods of drastic economic or market
changes, it is possible that the telephone exchange procedures may be difficult
to implement, although this has not been the case with the Fund in the past.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the exchange of such shares.
Tax Considerations of Exchanges. If you exchange shares of the Fund for shares
of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is considered a
sale of the Fund's shares -- and the exchange into the other Fund is considered
a purchase. As a result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.
Frequent Exchanges. A pattern of frequent exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. The Fund will notify you in advance of limiting your exchange
privileges.
CDSC Calculations on Exchanges. See the "Share Class Arrangements" section of
this Prospectus for a discussion of how applicable contingent deferred sales
charges (CDSCs) are calculated for shares of one Morgan Stanley Dean Witter Fund
that are exchanged for shares of another.
For further information regarding exchange privileges, you should contact your
Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.
12
<PAGE>
[GRAPHIC OMITTED]
HOW TO SELL SHARES
- ------------------
You can sell some or all of your Fund shares at any time. If you sell Class A,
Class B or Class C shares, your net sale proceeds are reduced by the amount of
any applicable CDSC. Your shares will be sold at the next price calculated after
we receive your order to sell as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or
Financial Advisor other authorized financial representative.
--------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or
deposited in your brokerage account.
- ------------------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
[GRAPHIC OMITTED] o your account number;
o the dollar amount or the number of shares you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
--------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that
payment be sent to any address other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature guarantee. You can obtain a
signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean
Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at (800)
869-NEWS for a determination as to whether a particular institution is an eligible
guarantor.) A notary public cannot provide a signature guarantee. Additional
documentation may be required for shares held by a corporation, partnership, trustee
or executor.
--------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ
07303. If you hold share certificates, you must return the certificates, along
with the letter and any required additional documentation.
--------------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is registered, or
otherwise according to your instructions.
- ------------------------------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or
[GRAPHIC OMITTED] more, or in any whole percentage of a Fund's balance (provided the amount is at least $25),
on a monthly, quarterly, semi-annual or annual basis, from any Fund with a
balance of at least $1,000. Each time you add a Fund to the plan, you must
meet the plan requirements.
--------------------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under
certain circumstances. See the Class B waiver categories listed in the "Share
Class Arrangements" section of this Prospectus.
--------------------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley Dean
Witter Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your
plan at any time. Please remember that withdrawals from the plan are sales of shares,
not Fund "distributions," and ultimately may exhaust your account balance. The Fund
may terminate or revise the plan at any time.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Payment for Sold Shares. After we receive your complete instructions to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.
Payment may be postponed or the right to sell your shares suspended under
unusual circumstances. If you request to sell shares that were recently
purchased by check, your sales will not be effected until it has been verified
that the check has been honored.
Tax Considerations. Normally, your sale of Fund shares is subject to federal and
state income tax. You should review the "Tax Consequences" section of this
Prospectus and consult your own tax professional about the tax consequences of a
sale.
Reinstatement Privilege. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the date of
sale, invest any portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any CDSC paid in
connection with the sale.
Involuntary Sales. The Fund reserves the right, on sixty days' notice, to sell
the shares of any shareholder (other than shares held in an IRA or 403(b)
Custodial Account) whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through EasyInvestSM, if after
12 months the shareholder has invested less than $1,000 in the account.
However, before the Fund sells your shares in this manner, we will notify you
and allow you sixty days to make an additional investment in an amount that will
increase the value of your account to at least the required amount before the
sale is processed. No CDSC will be imposed on any involuntary sale.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the sale of such shares.
14
<PAGE>
[GRAPHIC OMITTED]
DISTRIBUTIONS
- -------------
{sidebar}
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
{end sidebar}
The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns income from stocks and
interest from fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." The Fund realizes capital gains
whenever it sells securities for a higher price than it paid for them. These
amounts may be passed along as "capital gain distributions."
The Fund declares income dividends separately for each Class. Distributions paid
on Class A and Class D shares will be higher than for Class B and Class C
because distribution fees that Class B and Class C pay are higher. Normally,
income dividends are distributed to shareholders annually. Capital gains, if
any, are usually distributed in December. The Fund, however, may retain and
reinvest any long-term capital gains. The Fund may at times make payments from
sources other than income or capital gains that represent a return of a portion
of your investment.
Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in writing
that all distributions be paid in cash. If you elect the cash option, the Fund
will mail a check to you no later than seven business days after the
distribution is declared. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid, your request should be received
by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.
[GRAPHIC OMITTED]
TAX CONSEQUENCES
- ----------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred retirement account,
such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when:
o The Fund makes distributions; and
o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.
Taxes on Distributions. Your distributions are normally subject to federal and
state income tax when they are paid, whether you take them in cash or reinvest
them in Fund shares. A distribution also may be subject to local income tax. Any
income dividend distributions and any short-term capital gain distributions are
taxable to you as
15
<PAGE>
ordinary income. Any long-term capital gain distributions are taxable as
long-term capital gains, no matter how long you have owned shares in the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
full information on your dividends and capital gains for tax purposes.
Taxes on Sales. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.
When you open your Fund account, you should provide your Social Security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax of
31% on taxable distributions and redemption proceeds. Any withheld amount would
be sent to the IRS as an advance tax payment.
[GRAPHIC OMITTED]
SHARE CLASS ARRANGEMENTS
- ------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options according
to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative can help you decide which Class may be
appropriate for you.
The general public is offered three Classes: Class A shares, Class B shares and
Class C shares, which differ principally in terms of sales charges and ongoing
expenses. A fourth Class, Class D shares, is offered only to a limited category
of investors. Shares that you acquire through reinvested distributions will not
be subject to any front-end sales charge or CDSC -- contingent deferred sales
charge. Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide for the
distribution financing of shares of that Class.
16
<PAGE>
The chart below compares the sales charge and the maximum annual 12b-1 fees
applicable to each Class:
<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or more;
shares sold without an initial sales charge are generally subject to a 1.0%
CDSC during first year. 0.25%
- ----------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% after six years. 1.0%
- ----------------------------------------------------------------------------------------------------
C 1.0% CDSC during first year 1.0%
- ----------------------------------------------------------------------------------------------------
D None None
- ----------------------------------------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares are sold at net asset value plus an initial sales
charge of up to 5.25%. The initial sales charge is reduced for purchases of
$25,000 or more according to the schedule below. Investments of $1 million or
more are not subject to an initial sales charge, but are generally subject to a
contingent deferred sales charge, or CDSC, of 1.0% on sales made within one year
after the last day of the month of purchase. The CDSC will be assessed in the
same manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of the
average daily net assets of the Class.
{sidebar}
FRONT-END SALES CHARGE OR FSC An initial sales charge you pay when purchasing
Class A shares that is based on a percentage of the offering price. The
percentage declines based upon the dollar value of Class A shares you purchase.
We offer three ways to reduce your Class A sales charges -- the Combined
Purchase Privilege, Right of Accumulation and Letter of Intent.
{end sidebar}
The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
----------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
- -------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
- -------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- -------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- -------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- -------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- -------------------------------------------------------------------------------------
$1 million and over 0 0
- -------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class A shares
in a single transaction by:
o A single account (including an individual, trust or fiduciary account).
o Family member accounts (limited to husband, wife and children under the age
of 21).
o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.
o Tax-exempt organizations.
o Groups organized for a purpose other than to buy mutual fund shares.
Combined Purchase Privilege. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.
Right of Accumulation. You also may benefit from a reduction of sales charges,
if the cumulative net asset value of Class A shares of the Fund purchased in a
single transaction, together with shares of other Funds you currently own which
were previously purchased at a price including a front-end sales charge
(including shares acquired through reinvestment of distributions), amounts to
$25,000 or more. Also, if you have a cumulative net asset value of all your
Class A and Class D shares equal to at least $5 million (or $25 million for
certain employee benefit plans), you are eligible to purchase Class D shares of
any Fund subject to the Fund's minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative, (or Morgan Stanley Dean Witter Trust FSB if
you purchase directly through the Fund) at the time a purchase order is placed,
that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund shares or the
Fund's transfer agent does not confirm your represented holdings.
Letter of Intent. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of intent." A
letter of intent provides for the purchase of Class A shares of the Fund or
other Multi-Class Funds or shares of FSC Funds within a thirteen-month period.
The initial purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter Funds
which were previously purchased at a price including a front-end sales charge
during the 90-day period prior to the distributor receiving the letter of
intent, and (2) the cost of shares of other Funds you currently own acquired in
exchange for shares of Funds purchased during that period at a price including a
front-end sales charge. You can obtain a letter of intent by contacting your
Morgan
18
<PAGE>
Stanley Dean Witter Financial Advisor or other authorized financial
representative, or by calling (800) 869-NEWS. If you do not achieve the stated
investment goal within the thirteen-month period, you are required to pay the
difference between the sales charges otherwise applicable and sales charges
actually paid, which may be deducted from your investment.
Other Sales Charge Waivers. In addition to investments of $1 million or more,
your purchase of Class A shares is not subject to a front-end sales charge (or a
CDSC upon sale) if your account qualifies under one of the following categories:
o A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including termination fees, mandatory sale or
transfer restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset based fee for investment advisory,
administrative and/or brokerage services.
o Employer-sponsored employee benefit plans, whether or not qualified under
the Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB
serves as trustee or Dean Witter Reynolds' Retirement Plan Services serves
as recordkeeper under a written Recordkeeping Services Agreement ("MSDW
Eligible Plans") which have at least 200 eligible employees.
o A MSDW Eligible Plan whose Class B shares have converted to Class A shares,
regardless of the plan's asset size or number of eligible employees.
o A client of a Morgan Stanley Dean Witter Financial Advisor who joined us
from another investment firm within six months prior to the date of purchase
of Fund shares, and you used the proceeds from the sale of shares of a
proprietary mutual fund of that Financial Advisor's previous firm that
imposed either a front-end or deferred sales charge to purchase Class A
shares, provided that: (1) you sold the shares not more than 60 days prior
to purchase, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.
o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.
o Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries, such persons' spouses and children
under the age of 21, and trust accounts for which any of such persons is a
beneficiary.
19
<PAGE>
CLASS B SHARES Class B shares are offered at net asset value with no initial
sales charge but are subject to a contingent deferred sales charge, or CDSC, as
set forth in the table below. For the purpose of calculating the CDSC, shares
are deemed to have been purchased on the last day of the month during which they
were purchased.
{sidebar}
CONTINGENT DEFERRED SALES CHARGE OR CDSC A fee you pay when you sell shares of
certain Morgan Stanley Dean Witter Funds purchased without an initial sales
charge. This fee declines the longer you hold your shares as set forth in the
table.
{end sidebar}
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE OF
YEAR SINCE PURCHASE PAYMENT MADE AMOUNT REDEEMED
- -----------------------------------------------------------------------------
<S> <C>
First 5.0%
- -----------------------------------------------------------------------------
Second 4.0%
- -----------------------------------------------------------------------------
Third 3.0%
- -----------------------------------------------------------------------------
Fourth 2.0%
- -----------------------------------------------------------------------------
Fifth 2.0%
- -----------------------------------------------------------------------------
Sixth 1.0%
- -----------------------------------------------------------------------------
Seventh and thereafter None
- -----------------------------------------------------------------------------
</TABLE>
Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be sold
or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value or the cost of the
shares being sold.
CDSC Waivers. A CDSC, if otherwise applicable, will be waived in the case of:
o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates to
the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and your
spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b)
Custodial Account, provided in either case that the sale is requested within
one year of your death or initial determination of disability.
o Sales in connection with the following retirement plan "distributions": (i)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a "key employee" of
a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions
from an IRA or 403(b) Custodial Account following attainment of age 59 1/2;
or (iii) a tax-free return of an excess IRA contribution (a "distribution"
does not include a direct transfer of IRA, 403(b) Custodial Account or
retirement plan assets to a successor custodian or trustee).
o Sales of shares held for you as a participant in a MSDW Eligible Plan.
o Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic Withdrawal
Plan and based on the next calculated share price. You may have this CDSC
waiver applied in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Shares with no CDSC will be sold first,
followed by those with the lowest CDSC. As such, the waiver
20
<PAGE>
benefit will be reduced by the amount of your shares that are not subject to a
CDSC. If you suspend your participation in the plan, you may later resume plan
payments without requiring a new determination of the account value for the 12%
CDSC waiver.
All waivers will be granted only following the Fund's Distributor receiving
confirmation of your entitlement. If you believe you are eligible for a CDSC
waiver, please contact your Financial Advisor or call (800) 869-NEWS.
Distribution Fee. Class B shares are also subject to an annual distribution
(12b-1) fee of 1.0% of the average daily net assets of Class B shares.
Conversion Feature. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge. The
ten year period runs from the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through an exchange, from
the last day of the month in which the original Class B shares were purchased;
the shares will convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically reinvested
distributions will convert to Class A shares on the same basis. (Class B shares
acquired in exchange for shares of another Morgan Stanley Dean Witter Fund
originally purchased before May 1, 1997, however, will convert to Class A shares
in May 2007.)
In the case of Class B shares held in a MSDW Eligible Plan, the plan is treated
as a single investor and all Class B shares will convert to Class A shares on
the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund
purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the conversion
feature may be cancelled if it is deemed a taxable event in the future by the
Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market Fund, a No-Load
Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust,
the holding period for conversion is frozen as of the last day of the month of
the exchange and resumes on the last day of the month you exchange back into
Class B shares.
Exchanging Shares Subject to a CDSC. There are special considerations when you
exchange Fund shares that are subject to a CDSC. When determining the length of
time you held the shares and the corresponding CDSC rate, any period (starting
at the end of the month) during which you held shares of a fund that does not
charge a CDSC will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a fund that does
not charge a CDSC.
21
<PAGE>
For example, if you held Class B shares of the Fund for one year, exchanged to
Class B of another Morgan Stanley Dean Witter Multi-Class Fund for another year,
then sold your shares, a CDSC rate of 4% would be imposed on the shares based on
a two year holding period -- one year for each Fund. However, if you had
exchanged the shares of the Fund for a Money Market Fund (which does not charge
a CDSC) instead of the Multi-Class Fund, then sold your shares, a CDSC rate of
5% would be imposed on the shares based on a one year holding period. The one
year in the Money Market Fund would not be counted. Nevertheless, if shares
subject to a CDSC are exchanged for a fund that does not charge a CDSC, you will
receive a credit when you sell the shares equal to the distribution (12b-1) fees
you paid on those shares while in that Fund up to the amount of any applicable
CDSC.
In addition, shares that are exchanged into or from a Morgan Stanley Dean Witter
Fund subject to a higher CDSC rate will be subject to the higher rate, even if
the shares are re-exchanged into a Fund with a lower CDSC rate.
CLASS C SHARES Class C shares are sold at net asset value with no initial sales
charge but are subject to a CDSC of 1.0% on sales made within one year after the
last day of the month of purchase. The CDSC will be assessed in the same manner
and with the same CDSC waivers as with Class B shares.
Distribution Fee. Class C shares are subject to an annual distribution (12b-1)
fee of up to 1.0% of the average daily net assets of that Class. The Class C
shares' distribution fee may cause that Class to have higher expenses and pay
lower dividends than Class A or Class D shares. Unlike Class B shares, Class C
shares have no conversion feature and, accordingly, an investor that purchases
Class C shares may be subject to distribution (12b-1) fees applicable to Class C
shares for an indefinite period.
CLASS D SHARES Class D shares are offered without any sales charge on purchases
or sales and without any distribution (12b-1) fee. Class D shares are offered
only to investors meeting an initial investment minimum of $5 million ($25
million for MSDW Eligible Plans) and the following categories of investors:
o Investors participating in the Investment Manager's mutual fund asset
allocation program (subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor pursuant to which they
pay an asset based fee for investment advisory, administrative and/or
brokerage services.
o Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or any
of its subsidiaries for the benefit of certain employees of Morgan Stanley
Dean Witter & Co. and its subsidiaries.
o Certain unit investment trusts sponsored by Dean Witter Reynolds.
22
<PAGE>
o Certain other open-end investment companies whose shares are distributed by
the Fund's distributor.
o Investors who were shareholders of the Dean Witter Retirement Series on
September 11, 1998 for additional purchases for their former Dean Witter
Retirement Series accounts.
Meeting Class D Eligibility Minimums. To meet the $5 million ($25 million for
MSDW Eligible Plans) initial investment to qualify to purchase Class D shares
you may combine: (1) purchases in a single transaction of Class D shares of the
Fund and other Morgan Stanley Dean Witter Multi-Class Funds and/or (2) previous
purchases of Class A and Class D shares of Multi-Class Funds and shares of FSC
Funds you currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a cash payment
representing an income dividend or capital gain and you reinvest that amount in
the applicable Class of shares by returning the check within 30 days of the
payment date, the purchased shares would not be subject to an initial sales
charge or CDSC.
PLANOF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company Act of
1940 with respect to the distribution of Class A, Class B and Class C shares.
The Plan allows the Fund to pay distribution fees for the sale and distribution
of these shares. It also allows the Fund to pay for services to shareholders of
Class A, Class B and Class C shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment in these Classes and may cost you more than paying other
types of sales charges.
23
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance over the life of the Fund. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate an investor would have earned or lost on an investment in the
Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SEPTEMBER 26, 1997*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.18 $10.00
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.10 0.10
Net realized and unrealized gain 3.85 0.11
------ ------
Total income from investment operations 3.95 0.21
- -----------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income (0.07) (0.03)
Net realized gain (0.01) --
----- ------
Total dividends and distributions (0.08) (0.03)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $14.05 $10.18
- ------------------------------- ------ -------
TOTAL RETURN+ 8.82% 2.05%(1)
- -----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------------
Expenses 0.73%(3)(4) 0.75%(2)(3)
- -----------------------------------------------------------------------------------------------------
Net investment income 0.72%(3)(4) 0.91%(2)(3)
- -----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $99,140 $28,719
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 1%
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment income
ratios would have been 0.81% and 0.64%, respectively, for the year ended
August 31, 1999 and 0.89% and 0.77%, respectively, for period ended August
31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SEPTEMBER 26, 1997*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS B SHARES++
- ---------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.13 $10.00
- ------------------------------------------- ------ ------
Income (loss) from investment operations:
Net investment income (loss) (0.01) 0.02
Net realized and unrealized gain 3.83 0.12
------ ------
Total income from investment operations 3.82 0.14
- ---------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income (0.01) (0.01)
Net realized gain (0.01) --
------ ------
Total dividends and distributions (0.02) (0.01)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.93 $10.13
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 37.68% 1.38%(1)
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------
Expenses 1.50% (3)(4) 1.50%(2)(3)
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.05)%(3)(4) 0.16%(2)(3)
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,587,661 $536,349
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 1%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment income
ratios would have been 1.58% and (0.13)%, respectively, for the year ended
August 31, 1999 and 1.64% and 0.02%, respectively, for the period ended
August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
25
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SEPTEMBER 26, 1997*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS C SHARES++
- ---------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.13 $10.00
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.01) 0.02
Net realized and unrealized gain 3.83 0.12
------ ----
Total income from investment operations 3.82 0.14
---------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income (0.01) (0.01)
Net realized gain (0.01) --
------ ----
Total dividends and distributions (0.02) (0.01)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.93 $10.13
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 37.70% 1.37%(1)
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------
Expenses 1.50% (3)(4) 1.50%(2)(3)
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.05)%(3)(4) 0.16%(2)(3)
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $143,092 $40,730
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 1%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment income
ratios would have been 1.58% and (0.13)%, respectively, for year ended
August 31, 1999 and 1.64% and 0.02%, respectively, for the period ended
August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
26
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SEPTEMBER 26, 1997*
AUGUST 31, 1999 THROUGH AUGUST 31, 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS D SHARES++
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.20 $10.00
- ------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.13 0.12
Net realized and unrealized gain 3.85 0.11
----- -----
Total income from investment operations 3.98 0.23
- ------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income (0.08) (0.03)
Net realized gain (0.01) --
----- -----
Total dividends and distributions (0.09) (0.03)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.09 $10.20
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 39.13% 2.30%(1)
- ------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------
Expenses 0.50%(3)(4) 0.50%(2)(3)
- ------------------------------------------------------------------------------------------------------
Net investment income 0.95%(3)(4) 1.16%(2)(3)
- ------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $16,538 $14,186
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 1%
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment income
ratios would have been 0.58% and 0.87%, respectively, for the year ended
August 31, 1999 and 0.64% and 1.02%, respectively, for the period ended
August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
27
<PAGE>
NOTES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on in and
meet the family!
- --------------------------------------------------------------------------------
GROWTH FUNDS
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH & INCOME FUNDS
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value-Added Market Series/Equity Portfolio
Value Fund
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
INCOME FUNDS
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund(NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust(FSC)
Limited Term Municipal Trust(NL)
Multi-State Municipal Series Trust(FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund(MM)
U.S. Government Money Market Trust(MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust(MM)
New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
There may be Funds created after this Prospectus was published. Please consult
the inside back cover of a new Fund's prospectus for its designations, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of Funds are: NL -- No-Load (Mutual) Fund; MM --
Money Market Fund; FSC -- A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.
<PAGE>
PROSPECTUS - OCTOBER 29, 1999
Morgan Stanley Dean Witter
S&P 500 INDEX FUND
Additional information about the Fund's investments is available in the Fund's
Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's Statement of Additional Information also providesadditional information
about the Fund. The Statement of Additional Information is incorporated herein
by reference (legally is part of this Prospectus). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.MSDW.COM/INDIVIDUAL/FUNDS
Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov), and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
DC 20549-6009.
TICKER SYMBOLS:
Class A: SPIAX Class C: SPICX
--------------- ---------------
Class B: SPIBX Class D: SPIDX
--------------- ---------------
A MUTUAL FUND THAT SEEKS TO PROVIDE INVESTMENT RESULTS THAT, BEFORE EXPENSES,
CORRESPOND TO THE TOTAL RETURN (I.E., THE COMBINATION OF CAPITAL CHANGES AND
INCOME) OF THE STANDARD & POOR'S (REGISTERED TRADEMARK) 500 COMPOSITE STOCK
PRICE INDEX
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-8265)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION MORGAN STANLEY DEAN WITTER
S&P 500 INDEX FUND
OCTOBER 29, 1999
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. The
Prospectus (dated October 29, 1999) for the Morgan Stanley Dean Witter S&P 500
Index Fund may be obtained without charge from the Fund at its address or
telephone number listed below or from Dean Witter Reynolds at any of its branch
offices.
Morgan Stanley Dean Witter
S&P 500 Index Fund
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
I. Fund History ............................................................... 4
II. Description of the Fund and Its Investments and Risks ...................... 4
A. Classification ...................................................... 4
B. Investment Strategies and Risks ..................................... 4
C. Fund Policies/Investment Restrictions ............................... 8
III. Management of the Fund ..................................................... 9
A. Board of Trustees ................................................... 9
B. Management Information .............................................. 9
C. Compensation ........................................................ 14
IV. Control Persons and Principal Holders of Securities ........................ 16
V. Investment Management and Other Services ................................... 16
A. Investment Manager .................................................. 16
B. Principal Underwriter ............................................... 17
C. Services Provided by the Investment Manager and Fund Expenses Paid
by Third Parties ................................................... 17
D. Dealer Reallowances ................................................. 18
E. Rule 12b-1 Plan ..................................................... 18
F. Other Service Providers ............................................. 22
VI. Brokerage Allocation and Other Practices ................................... 23
A. Brokerage Transactions .............................................. 23
B. Commissions ......................................................... 23
C. Brokerage Selection ................................................. 23
D. Directed Brokerage .................................................. 24
E. Regular Broker-Dealers .............................................. 24
VII. Capital Stock and Other Securities ......................................... 24
VIII. Purchase, Redemption and Pricing of Shares ................................. 25
A. Purchase/Redemption of Shares ....................................... 25
B. Offering Price ...................................................... 26
IX. Taxation of the Fund and Shareholders ...................................... 26
X. Underwriters ............................................................... 29
XI. Calculation of Performance Data ............................................ 29
XII. Financial Statements ....................................................... 30
</TABLE>
2
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
The terms defined in this glossary are frequently used in this Statement of
Additional Information (other terms used occasionally are defined in the text of
the document).
"Custodian" -- The Bank of New York.
"Dean Witter Reynolds" -- Dean Witter Reynolds Inc., a wholly-owned
broker-dealer subsidiary of MSDW.
"Distributor" -- Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.
"Financial Advisors" -- Morgan Stanley Dean Witter authorized financial
services representatives.
"Fund" -- Morgan Stanley Dean Witter S&P 500 Index Fund, a registered
open-end investment company.
"Investment Manager" -- Morgan Stanley Dean Witter Advisors Inc., a
wholly-owned investment advisor subsidiary of MSDW.
"Independent Trustees" -- Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.
"Morgan Stanley & Co." -- Morgan Stanley & Co. Incorporated, a
wholly-owned broker-dealer subsidiary of MSDW.
"Morgan Stanley Dean Witter Funds" -- Registered investment companies (i)
for which the Investment Manager serves as the investment advisor; and (ii) that
hold themselves out to investors as related companies for investment and
investor services.
"MSDW" -- Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm.
"MSDW Services Company" -- Morgan Stanley Dean Witter Services Company Inc.,
a wholly-owned fund services subsidiary of the Investment Manager.
"Transfer Agent" -- Morgan Stanley Dean Witter Trust FSB, a wholly-owned
transfer agent subsidiary of MSDW.
"Trustees" -- The Board of Trustees of the Fund.
3
<PAGE>
I. FUND HISTORY
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust, under a
Declaration of Trust, on June 18, 1997, under the name Dean Witter S&P 500 Index
Fund. Effective June 22, 1998, the Fund's name was changed to Morgan Stanley
Dean Witter S&P 500 Index Fund.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------
A. CLASSIFICATION
The Fund is an open-end, diversified management investment company whose
investment objective is to seek to provide investment results that, before
expenses, correspond to the total return (i.e., the combination of capital
changes and income) of the Standard & Poor's (Registered Trademark) 500
Composite Stock Price Index.
B. INVESTMENT STRATEGIES AND RISKS
The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's Prospectus titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information" and "Additional Risk Information."
ADDITIONAL INFORMATION CONCERNING THE S&P 500 INDEX. The Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The
McGraw-Hill Companies Inc. ("S&P"). S&P makes no representation or warranty,
express or implied, to the owners of shares of the Fund or any member of the
public regarding the advisability of investing in securities generally or in the
Fund particularly or the ability of the S&P 500 Index to track general stock
market performance. S&P's only relationship to the Fund is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index which is
determined, composed and calculated by S&P without regard to the Fund. S&P has
no obligation to take the needs of the Fund or the owners of shares of the Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Fund or the timing of the issuance of sale of shares of
the Fund. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Fund, owners of shares of the Fund,
or any other person or entity from the use of the S&P 500 Index or any data
included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
STOCK INDEX FUTURES TRANSACTIONS. The Fund may invest in stock index
futures.
A futures contract purchaser incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified time
in the future for a specified price. A seller of a futures contract incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price.
Index futures contracts provide for the delivery of an amount of cash equal
to a specified dollar amount times the difference between the index value at the
open or close of the last trading day of the contract and the futures contract
price. A futures contract sale is closed out by effecting a futures contract
purchase for the same aggregate amount of the specific type of security and the
same delivery date. If the sale price exceeds the offsetting purchase price, the
seller would be paid the difference and would realize a gain. If the offsetting
purchase price exceeds the sale price, the seller would pay the difference
4
<PAGE>
and would realize a loss. Similarly, a futures contract purchase is closed out
by effecting a futures contract sale for the same aggregate amount of the
specific type of security and the same delivery date. If the offsetting sale
price exceeds the purchase price, the purchaser would realize a gain, whereas if
the purchase price exceeds the offsetting sale price, the purchaser would
realize a loss. There is no assurance that the Fund will be able to enter into a
closing transaction.
Margin. If the Fund enters into a futures contract, it is initially
required to deposit an "initial margin" of cash or U.S. Government securities or
other liquid portfolio securities ranging from approximately 2% to 5% of the
contract amount. Initial margin requirements are established by the exchanges on
which futures contracts trade and may, from time to time, change. In addition,
brokers may establish margin deposit requirements in excess of those required by
the exchanges.
Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a broker's client but is, rather, a good faith deposit on the futures
contract which will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Fund may be required to make subsequent deposits of cash or U.S. Government
securities, called "variation margin," which are reflective of price
fluctuations in the futures contract.
Limitations on Futures Contracts. The Fund may not enter into futures
contracts if, immediately thereafter, the amount committed to margin plus the
amount paid for premiums for unexpired options on futures contracts exceeds 5%
of the value of the Fund's total assets, after taking into account unrealized
gains and unrealized losses on such contracts it has entered into. However,
there is no overall limitation on the percentage of the Fund's net assets which
may be subject to a hedge position.
Risks of Transactions in Futures Contracts. The prices of indexes subject
to futures contracts (and thereby the futures contract prices) may correlate
imperfectly with the behavior of the cash prices of the Fund's portfolio
securities. A correlation may also be distorted (a) temporarily, by short-term
traders' seeking to profit from the difference between a contract or security
price objective and their cost of borrowed funds; (b) by investors in futures
contracts electing to close out their contracts through offsetting transactions
rather than meet margin deposit requirements; (c) by investors in futures
contracts opting to make or take delivery of underlying securities rather than
engage in closing transactions, thereby reducing liquidity of the futures
market; and (d) temporarily, by speculators who view the deposit requirements in
the futures markets as less onerous than margin requirements in the cash market.
Due to the possibility of price distortion in the futures market and because of
the possible imperfect correlation between movements in the prices of securities
and movements in the prices of futures contracts, a correct forecast or market
movement trends by the Investment Manager may still not result in a successful
hedging transaction.
There is no assurance that a liquid secondary market will exist for futures
contracts in which the Fund may invest. In the event a liquid market does not
exist, it may not be possible to close out a futures position and, in the event
of adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin. The absence of a liquid market in futures
conracts might cause the Fund to make or take delivery of the underlying
securities at a time when it may be disadvantageous to do so.
Exchanges also limit the amount by which the price of a futures contract
may move on any day. If the price moves equal the daily limit on successive
days, then it may prove impossible to liquidate a futures position until the
daily limit moves have ceased. In the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of variation margin on
open futures positions. In these situations, if the Fund has insufficient cash,
it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. The inability to
close out options and futures positions could also have an adverse impact on the
Fund's ability to effectively hedge its portfolio.
In the event of the bankruptcy of a broker through which the Fund engages
in transactions in futures the Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker.
5
<PAGE>
If the Fund maintains a short position in a futures contract it will cover
this position by holding, in a segregated account maintained on the books of the
Fund, cash, U.S. government securities or other liquid portfolio securities
equal in value (when added to any initial or variation margin on deposit) to the
market value of the securities underlying the futures contract. Such a position
may also be covered by owning the securities underlying the futures contract (in
the case of a stock index futures contract a portfolio of securities
substantially replicating the relevant index).
In addition, if the Fund holds a long position in a futures contract it
will hold cash, U.S. government securities or other liquid portfolio securities
equal to the purchase price of the contract (less the amount of initial or
variation margin on deposit) in a segregated account maintained on the books of
the Fund.
MONEY MARKET SECURITIES. The Fund may invest in various money market
securities for cash management purposes, which among others may include
commercial paper, bank acceptances, bank obligations, corporate debt securities,
certificates of deposit, U.S. Government securities, obligations of savings
institutions and repurchase agreements. Such securities are limited to:
U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;
Bank Obligations. Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more, and instruments
secured by such obligations, not including obligations of foreign branches of
domestic banks except to the extent below;
Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;
Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit. Certificates of deposit of banks and
savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered by
the FDIC), limited to $100,000 principal amount per certificate and to 15% or
less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the highest grade by Moody's Investors
Service, Inc. ("Moody's") or, if not rated, issued by a company having an
outstanding debt issue rated at least AAA by S&P or Aaa by Moody's; and
Repurchase Agreements. When cash may be available for only a few days, it
may be invested by the Fund in repurchase agreements until such time as it may
otherwise be invested or used for payments of obligations of the Fund. These
agreements, which may be viewed as a type of secured lending by the Fund,
typically involve the acquisition by the Fund of debt securities from a selling
financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying security
serving as collateral at a specified price and at a fixed time in the future,
usually not more than seven days from the date of purchase. The collateral will
be marked-to-market daily to determine that the value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until the
time when the repurchase is to occur. Although this date is deemed by the Fund
to be the maturity date of a repurchase agreement, the maturities of securities
subject to repurchase agreements are not subject to any limits.
6
<PAGE>
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager subject to procedures established by the Trustees. In addition, as
described above, the value of the collateral underlying the repurchase agreement
will be at least equal to the repurchase price, including any accrued interest
earned on the repurchase agreement. In the event of a default or bankruptcy by a
selling financial institution, the Fund will seek to liquidate such collateral.
However, the exercising of the Fund's right to liquidate such collateral could
involve certain costs or delays and, to the extent that proceeds from any sale
upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. It is the current policy of the Fund not to
invest in repurchase agreements that do not mature within seven days if any such
investment, together with any other illiquid assets held by the Fund, amounts to
more than 15% of its total assets.
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided that the loans are
callable at any time by the Fund, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least 100% of the market value, determined
daily, of the loaned securities. The advantage of these loans is that the Fund
continues to receive the income on the loaned securities while at the same time
earning interest on the cash amounts deposited as collateral, which will be
invested in short-term obligations. The Fund will not lend more than 20% of the
value of its total assets.
A loan may be terminated by the borrower on one business day's notice, or
by the Fund on four business days' notice. If the borrower fails to deliver the
loaned securities within four days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and, in some cases, even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Fund's management to be creditworthy and when the income which can be
earned from such loans justifies the attendant risks. Upon termination of the
loan, the borrower is required to return the securities to the Fund. Any gain or
loss in the market price during the loan period would inure to the Fund.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of the rights
if the matters involved would have a material effect on the Fund's investment in
the loaned securities. The Fund will pay reasonable finder's, administrative and
custodial fees in connection with a loan of its securities.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000 and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues.
Corporate and governmental data processing errors may result in production
problems for individual companies and overall economic uncertainties. Earnings
of individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
7
<PAGE>
C. FUND POLICIES/INVESTMENT RESTRICTIONS
The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.
The Fund will:
1. Seek to provide investment results that, before expenses, correspond to
the total return (i.e., the combination of capital changes and income)
of the Standard & Poor's 500 Composite Stock Price Index.
The Fund may not:
1. With respect to 75% of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer (other
than obligations issued, or guaranteed by, the United States Government,
its agencies or instrumentalities), except that the Fund may invest all
or substantially all of its assets in another registered investment
company having the same investment objective and policies and
substantially the same investment restrictions as the Fund.
2. With respect to 75% of its total assets, purchase more than 10% of all
outstanding voting securities or any class of securities of any one
issuer, except that the Fund may invest all or substantially all of its
assets in another registered investment company having the same
investment objective and policies and substantially the same investment
restrictions as the Fund.
3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to
obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities.
4. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities secured by
real estate or interests therein.
5. Purchase or sell commodities or commodities contracts except that the
Fund may purchase or sell index futures contracts.
6. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which operate, invest in, or sponsor such
programs.
7. Borrow money, except that the Fund may borrow from a bank for temporary
or emergency purposes in amounts not exceeding 5% (taken at the lower of
cost or current value) of its total assets (not including the amount
borrowed).
8. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings.
9. Issue senior securities as defined in the Act except insofar as the Fund
may be deemed to have issued a senior security by reason of: (a)
entering into any repurchase agreement; (b) purchasing or selling
futures contracts or options; (c) borrowing money in accordance with
restrictions described above; (d) purchasing any securities on a
when-issued or delayed delivery basis; or (e) lending portfolio
securities.
8
<PAGE>
10. Make loans of money or securities, except: (a) by the purchase of debt
obligations; (b) by investment in repurchase agreements; or (c) by
lending its portfolio securities.
11. Make short sales of securities.
12. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options thereon is not considered the
purchase of a security on margin.
13. Invest more than 15% of its total assets in "illiquid securities"
(securities for which market quotations are not readily available),
restricted securities and repurchase agreements which have a maturity
of longer than seven days.
14. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
15. Invest for the purpose of exercising control or management of any other
issuer, except that the Fund may invest all or substantially all of its
assets in another registered investment company having the same
investment objective and policies and substantially the same investment
restrictions as the Fund.
III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
A. BOARD OF TRUSTEES
The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Trustees
also conduct their review to ensure that administrative services are provided to
the Fund in a satisfactory manner.
Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to
exercise his or her powers in the interest of the Fund and not the Trustee's own
interest or the interest of another person or organization. A Trustee satisfies
his or her duty of care by acting in good faith with the care of an ordinarily
prudent person and in a manner the Trustee reasonably believes to be in the best
interest of the Fund and its shareholders.
B. MANAGEMENT INFORMATION
TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total number)
have no affiliation or business connection with the Investment Manager or any of
its affiliated persons and do not own any stock or other securities issued by
the Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Trustees. The other two Trustees (the "management Trustees") are
affiliated with the Investment Manager.
9
<PAGE>
The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 92 Morgan Stanley Dean Witter Funds, are shown
below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Michael Bozic (58) ........................ Vice Chairman of Kmart Corporation (since
Trustee December 1998); Director or Trustee of the Morgan
c/o Kmart Corporation Stanley Dean Witter Funds; formerly Chairman
3100 West Big Beaver Road and Chief Executive Officer of Levitz Furniture
Troy, Michigan Corporation (November 1995-November 1998) and
President and Chief Executive Officer of Hills
Department Stores (May 1991-July 1995); formerly
variously Chairman, Chief Executive Officer, President
and Chief Operating Officer (1987-1991) of the Sears
Merchandise Group of Sears, Roebuck and Co.; Director
of Eaglemark Financial Services, Inc. and Weirton
Steel Corporation.
Charles A. Fiumefreddo* (66) .............. Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Chief Officer of the Morgan Stanley Dean Witter Funds;
Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds;
Chairman and Director of the Transfer Agent; formerly
Director and/or officer of various MSDW subsidiaries
(until June 1998).
Edwin J. Garn (67) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator (R-
c/o Huntsman Corporation Utah) (1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt
Salt Lake City, Utah Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical company);
Director of Franklin Covey (time management systems),
BMW Bank of North America, Inc. (industrial loan
corporation), United Space Alliance (joint venture
between Lockheed Martin and the Boeing Company) and
Nuskin Asia Pacific (multilevel marketing); member of
the board of various civic and charitable
organizations.
Wayne E. Hedien (65) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds; Director of The PMI Group,
c/o Mayer, Brown & Platt Inc. (private mortgage insurance); Trustee and
Counsel to the Independent Trustees Vice Chairman of The Field Museum of Natural
1675 Broadway History; formerly associated with the Allstate
New York, New York Companies (1966-1994), most recently as
Chairman of The Allstate Corporation (March 1993-
December 1994) and Chairman and Chief Executive
Officer of its wholly-owned subsidiary, Allstate
Insurance Company (July 1989-December 1994); director
of various other business and charitable
organizations.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Dr. Manuel H. Johnson (50) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer) and NVR, Inc.
(home construction); Chairman and Trustee of the
Financial Accounting Foundation (oversight
organization of the Financial Accounting Standards
Board); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (1986-
1990) and Assistant Secretary of the U.S. Treasury.
Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director
of various business organizations.
Philip J. Purcell* (56) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds;
Director and/or officer of various
MSDW subsidiaries.
John L. Schroeder (69) .................... Retired; Chairman of the Derivatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens Utilities
Counsel to the Independent Trustees Company (telecommunications, gas, electric and
1675 Broadway water utilities company); formerly Executive Vice
New York, New York President and Chief Investment Officer of the
Home Insurance Company (August 1991-
September 1995).
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- -----------------------------------------------------
<S> <C>
Mitchell M. Merin (46) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998);
Two World Trade Center President and Director (since April 1997) and Chief
New York, New York Executive Officer (since June 1998) of the Investment
Manager and MSDW Services Company; Chairman, Chief
Executive Officer and Director of the Distributor
(since June 1998); Chairman and Chief Executive
Officer (since June 1998) and Director (since January
1998) of the Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); previously Chief
Strategic Officer of the Investment Manager and MSDW
Services Company and Executive Vice President of the
Distributor (April 1997-June 1998), Vice President of
the Morgan Stanley Dean Witter Funds (May 1997-April
1999), and Executive Vice President of Dean Witter,
Discover & Co.
Barry Fink (44) ........................... Senior Vice President (since March 1997) and Secretary
Vice President, and General Counsel (since February 1997) and Director
Secretary and General Counsel (since July 1998) of the Investment Manager and MSDW
Two World Trade Center Services Company; Senior Vice President (since March
New York, New York 1997) and Assistant Secretary and Assistant General
Counsel (since February 1997) of the Distributor;
Assistant Secretary of Dean Witter Reynolds (since
August 1996); Vice President, Secretary and General
Counsel of the Morgan Stanley Dean Witter Funds (since
February 1997); previously First Vice President (June
1993- February 1997), Vice President and Assistant
Secretary and Assistant General Counsel of the
Investment Manager and MSDW Services Company and
Assistant Secretary of the Morgan Stanley Dean Witter
Funds.
Guy G. Rutherfurd, Jr. (59) ............... Senior Vice President and Director of the Growth Group
Vice President of the Investment Manager; Vice President of various
Two World Trade Center Morgan Stanley Dean Witter Funds (since February
New York, New York 1997). Formerly Executive Vice President and Chief
Investment Officer of Nomura Asset Management
(U.S.A.).
Kevin Jung (33) ........................... Vice President of the Investment Manager (since
Assistant Vice President September 1997) and Vice President of various Morgan
Two World Trade Center Stanley Dean Witter Funds. Formerly a portfolio
New York, New York manager with UBS Asset Management Inc.
Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter
New York, New York Funds.
</TABLE>
- ----------
* A Trustee who is an "interested person" of the Fund, as defined in the
Investment Company Act.
12
<PAGE>
In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent
and Alice Weiss, Vice President of the Investment Manager, are Vice Presidents
of the Fund.
In addition, Marilyn K. Cranney, Lou Anne D. McInnis, Carsten Otto and Ruth
Rossi, First Vice Presidents and Assistant General Counsels of the Investment
Manager and MSDW Services Company, Todd Lebo, Vice President and Assistant
General Counsel of the Investment Manager and MSDW Services Company, and Natasha
Kassian, a Staff Attorney with the Investment Manager, are Assistant Secretaries
of the Fund.
INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.
The independent directors/trustees are charged with recommending to the
full board approval of management, advisory and administration contracts, Rule
12b-1 plans and distribution and underwriting agreements; continually reviewing
Fund performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent director/trustee vacancy on the board of any Fund that
has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter
Funds have a Rule 12b-1 plan.
The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
board.
The board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.
Finally, the board of each Fund has formed an Insurance Committee to review
and monitor the insurance coverage maintained by the Fund.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES FOR
ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees and the
Funds' management believe that having the same independent directors/trustees
for each of the Morgan Stanley Dean Witter Funds avoids the duplication of
effort that would arise from having different groups of individuals serving as
independent directors/trustees for each of the Funds or even of sub-groups of
Funds. They believe that having the same individuals serve as independent
directors/trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and enhances
their ability to negotiate on behalf of each Fund with the Fund's service
providers. This arrangement also precludes the possibility of separate groups of
independent directors/trustees arriving at conflicting decisions regarding
operations and management of the Funds and avoids the cost and confusion that
13
<PAGE>
would likely ensue. Finally, having the same independent directors/trustees
serve on all Fund boards enhances the ability of each Fund to obtain, at modest
cost to each separate Fund, the services of independent directors/trustees, of
the caliber, experience and business acumen of the individuals who serve as
independent directors/trustees of the Morgan Stanley Dean Witter Funds.
TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties. It
also provides that all third persons shall look solely to the Fund property for
satisfaction of claims arising in connection with the affairs of the Fund. With
the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.
C. COMPENSATION
The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or a
Committee meeting, or a meeting of the Independent Trustees and/or more than one
Committee meeting, take place on a single day, the Trustees are paid a single
meeting fee by the Fund. The Fund also reimburses such Trustees for travel and
other out-of-pocket expenses incurred by them in connection with attending such
meetings. Trustees and officers of the Fund who are or have been employed by the
Investment Manager or an affiliated company receive no compensation or expense
reimbursement from the Fund for their services as Trustee.
The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended August 31, 1999.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------- --------------
<S> <C>
Michael Bozic ................................................... $1,450
Edwin J. Garn ................................................... 1,600
Wayne E. Hedien ................................................. 1,650
Dr. Manuel H. Johnson ........................................... 1,913
Michael E. Nugent ............................................... 1,808
John L. Schroeder ............................................... 1,808
</TABLE>
14
<PAGE>
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1998 for services
to the 90 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1998.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES
TO 90
MORGAN STANLEY
NAME OF DEAN WITTER
INDEPENDENT TRUSTEE FUNDS
- ------------------------------- ---------------
<S> <C>
Michael Bozic .......................................... $120,150
Edwin J. Garn .......................................... 132,450
Wayne E. Hedien ........................................ 132,350
Dr. Manuel H. Johnson .................................. 155,681
Michael E. Nugent ...................................... 159,731
John L. Schroeder ...................................... 160,731
</TABLE>
As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an independent director/trustee who retires after
serving for at least five years (or such lesser period as may be determined by
the Board) as an independent director/trustee of any Morgan Stanley Dean Witter
Fund that has adopted the retirement program (each such Fund referred to as an
"Adopting Fund" and each such director/trustee referred to as an "Eligible
Trustee") is entitled to retirement payments upon reaching the eligible
retirement age (normally, after attaining age 72). Annual payments are based
upon length of service.
Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
independent director/trustee of any Adopting Fund in excess of five years up to
a maximum of 60.44% after ten years of service. The foregoing percentages may be
changed by the Board(1). "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Trustee for service to the Adopting Fund in
the five year period prior to the date of the Eligible Trustee's retirement.
Benefits under the retirement program are accrued as expenses on the books of
the Adopting Funds. Such benefits are not secured or funded by the Adopting
Funds.
- ----------
(1) An Eligible Trustee may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. In addition, the Eligible Trustee may elect that the
surviving spouse's periodic payment of benefits will be equal to a lower
percentage of the periodic amount when both spouses were alive. The amount
estimated to be payable under this method, through the remainder of the
later of the lives of the Eligible Trustee and spouse, will be the
actuarial equivalent of the Regular Benefit.
15
<PAGE>
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the calendar year ended December 31, 1998, and the
estimated retirement benefits for the Independent Trustees, to commence upon
their retirement, from the 55 Morgan Stanley Dean Witter Funds as of the
calendar year ended December 31, 1998.
RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
RETIREMENT ESTIMATED
BENEFITS ANNUAL
ESTIMATED ACCRUED AS BENEFITS UPON
CREDITED YEARS ESTIMATED EXPENSES RETIREMENT
OF SERVICE AT PERCENTAGE OF BY ALL FROM ALL
NAME OF RETIREMENT ELIGIBLE ADOPTING ADOPTING
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUNDS FUNDS(2)
- ------------------------------- ---------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Michael Bozic ................. 10 60.44% $22,377 $52,250
Edwin J. Garn ................. 10 60.44 35,225 52,250
Wayne E. Hedien ............... 9 51.37 41,979 44,413
Dr. Manuel H. Johnson ......... 10 60.44 14,047 52,250
Michael E. Nugent ............. 10 60.44 25,336 52,250
John L. Schroeder ............. 8 50.37 45,117 44,343
</TABLE>
- ----------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1) on
page 15.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following individuals owned 5% or more of the outstanding Class D
shares of the Fund as of October 6, 1999: Morgan Stanley Dean Witter Trust FSB,
Trustee, Kulicke & Soffa IND Inc. Incentive Savings Plan. P.O. Box 957, Jersey
City, NJ 07303-0957 -- 26.57%; E. Earl Raymond, Michael Armstrong, and Raymond
Roland, Trustees of the Roland Machinery Company Employee Benefit Plan Trust, UA
Dated 10/30/75, P.O. Box 2879, Springfield, IL 62708-2879 -- 17.49%; Hare & Co.,
c/o The Bank of New York, P.O. Box 11203, New York, NY 10286-1203 -- 14.23%.
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's officers
and Trustees as a group was less than 1% of the Fund's shares of beneficial
interest outstanding.
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
A. INVESTMENT MANAGER
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
New York 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Fund pays the Investment Manager monthly compensation calculated
daily by applying the following annual rates to the net assets of the Fund
determined as of the close of each business day: 0.40% to the portion of daily
net assets not exceeding $1.5 billion; 0.375% to the portion of daily net assets
exceeding $1.5 billion but not exceeding $3 billion; and 0.350% to the portion
of such daily net assets exceeding $3 billion. Prior to May 1, 1999, the fee was
0.40% of daily net assets. The Investment Manager has agreed, under its
Management Agreement with the Fund, to assume the Fund's operating expenses
(except for brokerage and 12b-1 fees) to the extent such operating expenses
16
<PAGE>
exceed on an annualized basis 0.50% of the average daily net assets of the Fund.
The management fee is allocated among the Classes pro rata based on the net
assets of the Fund attributable to each Class. Taking into account the
Investment Manager's assumption of expenses, for the period September 26, 1997
(commencement of operations) through August 31, 1998 and for the fiscal year
ended August 31, 1999, the Investment Manager paid compensation under the
Management Agreement in the amounts of $1,092,209 and $4,271,384, respectively.
The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors
which may include educational and/or business-related trips, and reimbursement
of educational and/or promotional and business-related expenses. The Distributor
also pays certain expenses in connection with the distribution of the Fund's
shares, including the costs of preparing, printing and distributing advertising
or promotional materials, and the costs of printing and distributing
prospectuses and supplements thereto used in connection with the offering and
sale of the Fund's shares. The Fund bears the costs of initial typesetting,
printing and distribution of prospectuses and supplements thereto to
shareholders. The Fund also bears the costs of registering the Fund and its
shares under federal and state securities laws and pays filing fees in
accordance with state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER
The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Investment Manager obtains and evaluates the information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective.
Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, the office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund may
reasonably require in the conduct of its business, including the preparation of
prospectuses, proxy statements and reports required to be filed with federal and
state securities commissions (except insofar as the participation or assistance
of independent accountants and attorneys is, in the opinion of the Investment
Manager, necessary or desirable). In addition, the Investment Manager pays the
salaries of all personnel, including officers of the Fund, who are employees of
the Investment Manager. The Investment Manager also bears the cost of telephone
service, heat, light, power and other utilities provided to the Fund.
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Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the Fund
and its shares under federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Trustees or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Trustees who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager); fees and expenses of the Fund's independent accountants; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Fund
which inure to its benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation. The 12b-1 fees
relating to a particular Class will be allocated directly to that Class. In
addition, other expenses associated with a particular Class (except advisory or
custodial fees) may be allocated directly to that Class, provided that such
expenses are reasonably identified as specifically attributable to that Class
and the direct allocation to that Class is approved by the Trustees.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Trustees; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees, including a majority of the Independent Trustees.
D. DEALER REALLOWANCES
Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is defined
in the Securities Act.
E. RULE 12B-1 PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the annual rate of 0.25% of the average daily net assets of Class A and 1.0% of
the average daily net assets of each of Class B and Class C.
The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the period September 26,
1997
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(commencement of operations) through August 31, 1998, and the fiscal year ended
August 31, 1999, in approximate amounts as provided in the table below (the
Distributor did not retain any of these amounts).
FOR THE PERIOD
SEPTEMBER 26, 1997
1999 THROUGH AUGUST 31, 1998
------------- ------------------------
Class A ......... FSCs:(1) $ 546,251 $297,370
CDSCs: $ 11,704 $ 17,842
Class B ......... CDSCs: $2,206,303 $689,099
Class C ......... CDSCs: $ 78,362 $ 24,054
- ----------
(1) FSCs apply to Class A only.
The Distributor has informed the Fund that the entire fee payable by Class
A and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. For the fiscal year ended August 31, 1999,
Class A, Class B and Class C shares of the Fund accrued payments under the Plan
amounting to $159,036, $11,548,279 and $954,033, respectively, which amounts are
equal to 0.23%, 1.00% and 1.00% of the average daily net assets of Class A,
Class B and Class C, respectively, for the fiscal year.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.
With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for the
sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value of
the respective accounts for which they are the Financial Advisors or dealers of
record in all cases. On orders of $1 million or more (for which no sales charge
was paid) or net asset value purchases by employer-sponsored employee benefit
plans, whether or not qualified under the Internal Revenue Code, for which the
Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement Plan
Services serves as recordkeeper pursuant to a written Recordkeeping Services
Agreement ("MSDW Eligible Plans"), the Investment Manager compensates Financial
Advisors by paying them, from its own funds, a gross sales credit of 1.0% of the
amount sold.
With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends or distributions) of the amount sold in all
cases. In the case of Class B shares purchased by MSDW Eligible Plans, Dean
Witter Reynolds compensates its Financial Advisors by paying them, from its own
funds, a gross sales credit of 3.0% of the amount sold.
With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.
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With respect to Class D shares other than shares held by participants in
the Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds's Financial Advisors by paying them,
from its own funds, commissions for the sale of Class D shares, currently a
gross sales credit of up to 1.0% of the amount sold. There is a chargeback of
100% of the amount paid if the Class D shares are redeemed in the first year and
a chargeback of 50% of the amount paid if the Class D shares are redeemed in the
second year after purchase. The Investment Manager also compensates Dean Witter
Reynolds's Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund asset
allocation program).
The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
Fund-associated distribution-related expenses, including sales compensation, and
overhead and other branch office distribution-related expenses including (a) the
expenses of operating Dean Witter Reynolds's branch offices in connection with
the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
These expenses may include compensation in the form of special sales incentives
for Financial Advisors such as receipt of educational and/or business related
trips, or reimbursement of educational and/or promotional and business-related
expenses. In the Distributor's reporting of the distribution expenses to the
Fund, in the case of Class B shares, such assumed interest (computed at the
"broker's call rate") has been calculated on the gross credit as it is reduced
by amounts received by the Distributor under the Plan and any contingent
deferred sales charges received by the Distributor upon redemption of shares of
the Fund. No other interest charge is included as a distribution expense in the
Distributor's calculation of its distribution costs for this purpose. The
broker's call rate is the interest rate charged to securities brokers on loans
secured by exchange-listed securities.
The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of Class
A, and 1.0%, in the case of Class C, of the average net assets of the respective
Class during the month. No interest or other financing charges, if any, incurred
on any distribution expenses on behalf of Class A and Class C will be
reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Trustees, including, a majority of the Independent
Trustees. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor will provide and the
Trustees will review a quarterly budget of projected distribution expenses to be
incurred on behalf of the Fund, together with a report explaining the purposes
and anticipated benefits of incurring such expenses. The Trustees will determine
which particular expenses, and the portions thereof, that may be borne by the
Fund, and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's Class A and
Class C shares.
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<PAGE>
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended August 31, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $64,847,729 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways: (i)
4.00% ($2,591,612)--advertising and promotional expenses; (ii) 0.33%
($214,550)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 95.67% ($62,041,567)--other expenses, including the
gross sales credit and the carrying charge, of which 4.08% ($2,534,175)
represents carrying charges, 39.71% ($24,636,060) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other authorized financial
representatives, and 56.21% ($34,871,332) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended August 31, 1999 were service fees. The remainder of the amounts accrued by
Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.
In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $46,739,132 as of August 31, 1999 (the end of the
Fund's fiscal year), which was equal to 2.94% of the net assets of Class B on
such date. Because there is no requirement under the Plan that the Distributor
be reimbursed for all distribution expenses with respect to Class B shares or
any requirement that the Plan be continued from year to year, this excess amount
does not constitute a liability of the Fund. Although there is no legal
obligation for the Fund to pay expenses incurred in excess of payments made to
the Distributor under the Plan and the proceeds of CDSCs paid by investors upon
redemption of shares, if for any reason the Plan is terminated, the Trustees
will consider at that time the manner in which to treat such expenses. Any
cumulative expenses incurred, but not yet recovered through distribution fees or
CDSCs, may or may not be recovered through future distribution fees or CDSCs.
In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales commission credited to Morgan Stanley Dean Witter Financial
Advisors and other authorized financial representatives at the time of sale may
be reimbursed in the subsequent calendar year. The Distributor has advised the
Fund that unreimbursed expenses representing a gross sales commission credited
to Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $101,447 in the case of Class C at
December 31, 1998 (end of the calendar year), which amount was equal to 0.14% of
the net assets of Class C on such date, and that there were no such expenses
that may be reimbursed in the subsequent year in the case of Class A on such
date. No interest or other financing charges will be incurred on any Class A or
Class C distribution expenses incurred by the Distributor under the Plan or on
any unreimbursed expenses due to the Distributor pursuant to the Plan.
No interested person of the Fund nor any Independent Trustee has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company
or certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result of
receiving a portion of the amounts expended thereunder by the Fund.
On an annual basis the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested
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and received from the Distributor and reviewed all the information which they
deemed necessary to arrive at an informed determination. In making their
determination to continue the Plan, the Trustees considered: (1) the Fund's
experience under the Plan and whether such experience indicates that the Plan is
operating as anticipated; (2) the benefits the Fund had obtained, was obtaining
and would be likely to obtain under the Plan, including that: (a) the Plan is
essential in order to give Fund investors a choice of alternatives for payment
of distribution and service charges and to enable the Fund to continue to grow
and avoid a pattern of net redemptions which, in turn, are essential for
effective investment management; and (b) without the compensation to individual
brokers and the reimbursement of distribution and account maintenance expenses
of Dean Witter Reynolds's branch offices made possible by the 12b-1 fees, Dean
Witter Reynolds could not establish and maintain an effective system for
distribution, servicing of Fund shareholders and maintenance of shareholder
accounts; and (3) what services had been provided and were continuing to be
provided under the Plan to the Fund and its shareholders. Based upon their
review, the Trustees, including each of the Independent Trustees, determined
that continuation of the Plan would be in the best interest of the Fund and
would have a reasonable likelihood of continuing to benefit the Fund and its
shareholders. In the Trustees' quarterly review of the Plan, they will consider
its continued appropriateness and the level of compensation provided therein.
The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) on not more than thirty days' written notice to any other party to the
Plan. So long as the Plan is in effect, the election and nomination of
Independent Trustees shall be committed to the discretion of the Independent
Trustees.
F. OTHER SERVICE PROVIDERS
(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT
Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various investment
plans. The principal business address of the Transfer Agent is Harborside
Financial Center, Plaza Two, Jersey City, New Jersey 07311.
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
The Bank of New York, 100 Church Street, New York, New York 10286, is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.
(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.
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VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the negotiation
of brokerage commissions, if any. Purchases and sales of securities on a stock
exchange are effected through brokers who charge a commission for their
services. In the over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a profit
to the dealer. The Fund also expects that securities will be purchased at times
in underwritten offerings where the price includes a fixed amount of
compensation, generally referred to as the underwriter's concession or discount.
On occasion, the Fund may also purchase certain money market instruments
directly from an issuer, in which case no commissions or discounts are paid.
For the period September 26, 1997 (commencement of operations) through
August 31, 1998 and the fiscal year ended August 31, 1999, the Fund paid a total
of $94,540 and $156,832 in brokerage commissions, respectively.
B. COMMISSIONS
Pursuant to an order of the SEC, the Fund may effect principal transactions
in certain money market instruments with Dean Witter Reynolds. The Fund will
limit its transactions with Dean Witter Reynolds to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will be
effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.
During the period September 26, 1997 (commencement of operations) through
August 31, 1998 and the fiscal year ended August 31, 1999, the Fund did not
effect any principal transactions with Dean Witter Reynolds.
Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Trustees, including the Independent
Trustees, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing standard. The Fund does not reduce the
management fee it pays to the Investment Manager by any amount of the brokerage
commissions it may pay to an affiliated broker or dealer.
During the period September 26, 1997 (commencement of operations) through
August 31, 1998 and the fiscal year ended August 31, 1999, the Fund paid no
brokerage commissions to an affiliated broker or dealer.
C. BROKERAGE SELECTION
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a
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requirement always to seek the lowest possible commission cost could impede
effective portfolio management and preclude the Fund and the Investment Manager
from obtaining a high quality of brokerage and research services. In seeking to
determine the reasonableness of brokerage commissions paid in any transaction,
the Investment Manager relies upon its experience and knowledge regarding
commissions generally charged by various brokers and on its judgment in
evaluating the brokerage and research services received from the broker
effecting the transaction. These determinations are necessarily subjective and
imprecise, as in most cases an exact dollar value for those services is not
ascertainable.
In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. The information
and services received by the Investment Manager from brokers and dealers may be
of benefit to the Investment Manager in the management of accounts of some of
its other clients and may not in all cases benefit the Fund directly.
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain initial
and secondary public offerings, the Investment Manager utilizes a pro rata
allocation process based on the size of the Morgan Stanley Dean Witter Funds
involved and the number of shares available from the public offering.
D. DIRECTED BROKERAGE
During the fiscal year ended August 31, 1999, the Fund did not pay any
brokerage commissions to brokers because of research services provided.
E. REGULAR BROKER-DEALERS
During the fiscal year ended August 31, 1999, the Fund purchased securities
issued by brokers or dealers that were among the ten brokers or the ten dealers
that executed transactions for or with the Fund in the largest dollar amounts
during the year. At August 31, 1999, the Fund owned common stock issued by these
issuers in the following amounts:
The Bank of New York -- $4,528,131, Merrill Lynch & Company Inc. --
$4,567,349, J.P. Morgan & Company Inc. -- $3,812,323, Lehman Brothers Inc. --
$1,062,315 and Bank One Corporation -- $7,884,081.
VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an unlimited
number of shares of beneficial interest. All shares of beneficial interest of
the Fund are of $0.01 par value and are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote
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<PAGE>
on any proposed material increase in Class A's expenses, if such proposal is
submitted separately to Class A shareholders. Also, Class A, Class B and Class C
bear expenses related to the distribution of their respective shares.
The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional Classes of shares
within any series. The Trustees have not presently authorized any such
additional series or Classes of shares other than as set forth in the
Prospectus.
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances the Trustees may be removed by action of the
Trustees. In addition, under certain circumstances the shareholders may call a
meeting to remove Trustees and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees.
Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund,
requires that notice of such Fund obligations include such disclaimer, and
provides for indemnification out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability, and
the nature of the Fund's assets and operations, the possibility of the Fund
being unable to meet its obligations is remote and thus, in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
The Trustees themselves have the power to alter the number and the terms of
office of the Trustees (as provided for in the Declaration of Trust), and they
may at any time lengthen or shorten their own terms or make their terms of
unlimited duration and appoint their own successors, provided that always at
least a majority of the Trustees has been elected by the shareholders of the
Fund.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------
A. PURCHASE/REDEMPTION OF SHARES
Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's Prospectus.
TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.
The Distributor and any authorized broker-dealer have appointed the
Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any other
Morgan Stanley Dean Witter Fund and the general administration of the exchange
privilege. No commission or discounts will be paid to the Distributor or any
authorized broker-dealer for any transactions pursuant to the exchange
privilege.
25
<PAGE>
TRANSFERS OF SHARES. In the event a shareholder requests a transfer of Fund
shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to a CDSC or free of such charge (and with regard to the length
of time shares subject to the charge have been held), any transfer involving
less than all of the shares in an account will be made on a pro rata basis (that
is, by transferring shares in the same proportion that the transferred shares
bear to the total shares in the account immediately prior to the transfer). The
transferred shares will continue to be subject to any applicable CDSC as if they
had not been so transferred.
B. OFFERING PRICE
The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's Distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Investment Management and Other Services--E. Rule 12b-1 Plan."
The price of Fund shares, called "net asset value," is based on the value
of the Fund's portfolio securities. Net asset value per share of each Class is
calculated by dividing the value of the portion of the Fund's securities and
other assets attributable to that Class, less the liabilities attributable to
that Class, by the number of shares of that Class outstanding. The assets of
each Class of shares are invested in a single portfolio. The net asset value of
each Class, however, will differ because the Classes have different ongoing
fees.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to the
time when assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where a security is traded on more than
one exchange, the security is valued on the exchange designated as the primary
market pursuant to procedures adopted by the Trustees); and (2) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest bid price. When market quotations are not
readily available, including circumstances under which it is determined by the
Investment Manager that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general supervision
of the Fund's Trustees.
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.
Futures are valued at the latest sale price on the commodities exchange on
which they trade unless the Trustees determine such price does not reflect their
market value, in which case they will be valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Trustees.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events which may affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the New York Stock Exchange and will therefore not be reflected in the
computation of the Fund's net asset value. If events that may affect the value
of such securities occur during such period, then these securities may be valued
at their fair value as determined in good faith under procedures established by
and under the supervision of the Trustees.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's
26
<PAGE>
income tax return and they are also subject to different rates of tax. The tax
treatment of the investment activities of the Fund will affect the amount and
timing and character of the distributions made by the Fund. Tax issues relating
to the Fund are not generally a consideration for shareholders such as tax
exempt entities and tax-advantaged retirement vehicles such as an IRA or 401(k)
plan. Shareholders are urged to consult their own tax professionals regarding
specific questions as to federal, state or local taxes.
INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
The Fund generally intends to distribute sufficient income and gains so
that the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.
Gains or losses on sales of securities by the Fund will be long-term
capital gains or losses if the securities have a tax holding period of more than
one year. Gains or losses on the sale of securities with a tax holding period of
one year or less will be short-term gains or losses.
Gains or losses on the Fund's transactions in listed non-equity options,
futures and options on futures generally are treated as 60% long-term and 40%
short-term. When the Fund engages in options and futures transactions, various
tax rules may accelerate or defer recognition of certain gains and losses,
change the character of certain gains or losses, or alter the holding period of
other investments held by the Fund. The application of these rules would
therefore also affect the amount, timing and character of distributions made by
the Fund.
Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such accrued discount as an income distribution in each year in order to
avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager will select which securities to sell. The
Fund may realize a gain or loss from such sales. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The maximum tax on long-term capital gains
applicable to individuals is 20%.
Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
Subject to certain exceptions, a corporate shareholder may be eligible for
a 70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.
27
<PAGE>
Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.
After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, the portion taxable as
long-term capital gains and the amount of any dividends eligible for the federal
dividends received deduction for corporations.
PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment company
will have the effect of reducing the net asset value of the shareholder's stock
in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, such dividends and capital gains distributions are
subject to federal income taxes. If the net asset value of the shares should be
reduced below a shareholder's cost as a result of the payment of dividends or
the distribution of realized long-term capital gains, such payment or
distribution would be in part a return of the shareholder's investment but
nonetheless would be taxable to the shareholder. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.
In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains or
losses and those held for more than one year generally result in long-term gain
or loss. Under current law, the maximum tax on long-term capital gains is 20%.
Any loss realized by shareholders upon a sale or redemption of shares within six
months of the date of their purchase will be treated as a long-term capital loss
to the extent of any distributions of net long-term capital gains with respect
to such shares during the six-month period.
Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.
Exchanges of Fund shares for shares of another fund, including shares of
other Morgan Stanley Dean Witter Funds, are also subject to similar tax
treatment. Such an exchange is treated for tax purposes as a sale of the
original shares in the first fund, followed by the purchase of shares in the
second fund.
If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
28
<PAGE>
X. UNDERWRITERS
- --------------------------------------------------------------------------------
The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plans."
XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involved a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (which the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. Based on this calculation, the average annual total returns of Class A,
Class B, Class C and Class D for the fiscal year ended August 31, 1999 and for
the period September 26, 1997 (commencement of operations) through August 31,
1999 were: Class A: 31.53% and 16.50%, respectively; Class B: 32.68% and 17.11%,
respectively; Class C: 36.70% and 18.89%, respectively; and Class D:
39.13% and 20.10%, respectively.
In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable sales charge. Based on this calculation, the average annual total
returns of Class A, Class B, Class C and Class D for the fiscal year ended
August 31, 1999 and the period September 26, 1997 (commencement of operations)
through August 31, 1999 were: Class A: 38.82% and 19.81%, respectively; Class B:
37.68% and 18.89%, respectively; Class C: 37.70% and 18.89%, respectively; and
Class D: 39.13% and 20.10%, respectively.
In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distribution are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sale charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on this calculation, the total returns
of Class A, Class B, Class C and Class D for the fiscal year ended August 31,
1999 and for the period September 26, 1997 (commencement of operations) through
August 31, 1999 were: Class A: 38.82% and 41.67%, respectively; Class B: 37.68%
and 39.59%, respectively; Class C: 37.70% and 39.59%, respectively; and Class D:
39.13% and 42.33%, respectively.
The Fund may also advertise the growth of hypothetical investment of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 in each Class of shares of the Fund by adding 1 to the
Fund's aggregate total return to date (expressed as a decimal and without taking
into account the effect of any applicable CDSC) and multiplying by $9,475,
$48,000 and $97,000 in the case of Class A (investments of $10,000, $50,000 and
29
<PAGE>
$100,000 adjusted for the initial sales charge) or by $10,000, $50,000 and
$100,000 in the case of each of Class B, Class C and Class D, as the case may
be. Investments of $10,000, $50,000 and $100,000 in each Class at inception of
the Class would have grown to the following amounts at August 31, 1999:
<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION -----------------------------------
CLASS DATE: $10,000 $50,000 $100,000
- ------------ ---------- --------- --------- -----------
<S> <C> <C> <C> <C>
Class A .................. 9/26/97 $13,423 $68,002 $137,420
Class B .................. 9/26/97 13,959 69,795 139,590
Class C .................. 9/26/97 13,959 69,795 139,590
Class D .................. 9/26/97 14,233 71,165 142,330
</TABLE>
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.
XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EXPERTS. The financial statements of the Fund for the fiscal year ended
August 31, 1999 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated herein in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
* * * * *
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from the
SEC.
30
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
COMMON STOCKS (97.7%)
Accident & Health Insurance (0.2%)
44,457 AFLAC, Inc. ............................. $ 1,997,786
22,189 Torchmark Corp. ......................... 632,386
39,606 UNUMProvident Corp. ..................... 1,428,291
--------------
4,058,463
--------------
Advertising (0.2%)
46,768 Interpublic Group of Companies,
Inc. .................................. 1,853,182
29,762 Omnicom Group, Inc. ..................... 2,243,311
--------------
4,096,493
--------------
Aerospace (0.9%)
162,065 Boeing Co. .............................. 7,343,570
18,269 Goodrich (B.F.) Co. (The) ............... 674,811
65,607 Lockheed Martin Corp. ................... 2,427,459
11,465 Northrop Grumman Corp. .................. 831,212
80,229 United Technologies Corp. ............... 5,305,143
--------------
16,582,195
--------------
Air Freight/Delivery Services (0.1%)
49,488 FDX Corp.* .............................. 2,100,147
--------------
Airlines (0.2%)
25,549 AMR Corp.* .............................. 1,497,810
23,351 Delta Air Lines, Inc. ................... 1,186,523
83,748 Southwest Airlines Co. .................. 1,397,545
12,285 US Airways Group Inc.* .................. 378,532
--------------
4,460,410
--------------
Alcoholic Beverages (0.4%)
79,145 Anheuser-Busch Companies, Inc. .......... 6,094,165
11,398 Brown-Forman Corp. (Class B) ............ 675,331
6,137 Coors (Adolph) Co. (Class B) ............ 350,193
--------------
7,119,689
--------------
Aluminum (0.3%)
37,602 Alcan Aluminium Ltd. (Canada) ........... 1,236,166
61,488 Alcoa, Inc. ............................. 3,969,819
10,733 Reynolds Metals Co. ..................... 679,533
--------------
5,885,518
--------------
Apparel (0.1%)
12,186 Fruit of the Loom, Inc. (Class A)* ...... 85,302
10,488 Liz Claiborne, Inc. ..................... 385,434
5,681 Russell Corp. ........................... 95,157
19,941 VF Corp. ................................ 717,876
--------------
1,283,769
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Auto Parts: O.E.M. (0.3%)
27,615 Dana Corp. .............................. $ 1,202,978
94,004 Delphi Automotive Systems Corp. ......... 1,762,575
11,946 Eaton Corp. ............................. 1,170,708
14,174 Johnson Controls, Inc. .................. 969,147
20,026 TRW Inc. ................................ 1,091,417
--------------
6,196,825
--------------
Automotive Aftermarket (0.1%)
12,618 Cooper Tire & Rubber Co. ................ 239,742
29,792 Genuine Parts Co. ....................... 860,244
25,953 Goodyear Tire & Rubber Co. .............. 1,456,612
--------------
2,556,598
--------------
Beverages -- Non-Alcoholic (1.9%)
410,555 Coca Cola Co. ........................... 24,556,321
70,621 Coca-Cola Enterprises Inc. .............. 2,008,285
245,741 PepsiCo, Inc. ........................... 8,385,912
--------------
34,950,518
--------------
Biotechnology (0.4%)
85,186 Amgen Inc.* ............................. 7,081,086
--------------
Books/Magazines (0.1%)
11,832 Harcourt General, Inc. .................. 518,389
8,631 Meredith Corp. .......................... 299,388
--------------
817,777
--------------
Broadcasting (0.5%)
118,445 CBS Corp.* .............................. 5,566,915
55,251 Clear Channel Communications,
Inc.* ................................ 3,871,023
--------------
9,437,938
--------------
Building Materials (0.1%)
9,121 Owens Corning ........................... 256,528
16,783 Vulcan Materials Co. .................... 715,375
--------------
971,903
--------------
Building Materials/DIY Chains (1.0%)
246,521 Home Depot, Inc. (The) .................. 15,068,596
61,783 Lowe's Companies, Inc. .................. 2,795,681
--------------
17,864,277
--------------
Building Products (0.1%)
6,661 Armstrong World Industries, Inc. ........ 323,475
56,061 Masco Corp. ............................. 1,587,227
--------------
1,910,702
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -------------
<S> <C> <C>
Cable Television (0.6%)
123,192 Comcast Corp. (Class A Special) ............. $ 4,011,439
100,750 MediaOne Group, Inc.* ....................... 6,624,312
--------------
10,635,751
--------------
Casino/Gambling (0.1%)
21,233 Harrah's Entertainment, Inc.* ............... 477,742
33,076 Mirage Resorts, Inc.* ....................... 432,055
--------------
909,797
--------------
Cellular Telephone (0.4%)
49,241 Nextel Communications, Inc.
(Class A)* ............................... 2,843,668
73,173 Sprint Corp. (PCS Group)* ................... 4,372,087
--------------
7,215,755
--------------
Clothing/Shoe/Accessory Stores (0.5%)
142,986 Gap, Inc. (The) ............................. 5,594,327
35,467 Limited (The), Inc. ......................... 1,343,285
23,639 Nordstrom, Inc. ............................. 669,279
53,526 TJX Companies, Inc. ......................... 1,545,563
--------------
9,152,454
--------------
Computer Communications (2.1%)
60,209 3Com Corp.* ................................. 1,490,173
28,648 Cabletron Systems, Inc.* .................... 481,644
531,480 Cisco Systems, Inc.* ........................ 36,007,770
--------------
37,979,587
--------------
Computer Software (5.4%)
10,151 Adobe Systems, Inc. ......................... 1,010,659
9,804 Autodesk, Inc. .............................. 225,492
39,234 BMC Software, Inc.* ......................... 2,108,827
89,234 Computer Associates International,
Inc. ..................................... 5,041,721
61,146 Compuware Corp.* ............................ 1,842,023
849,176 Microsoft Corp.* ............................ 78,548,780
55,981 Novell, Inc.* ............................... 1,322,551
239,499 Oracle Corp.* ............................... 8,726,745
45,046 Parametric Technology Corp.* ................ 627,829
40,055 PeopleSoft, Inc.* ........................... 563,273
--------------
100,017,900
--------------
Computer/Video Chains (0.3%)
34,048 Best Buy Co., Inc.* ......................... 2,391,872
33,429 Circuit City Stores, Inc.-Circuit City
Group .................................... 1,437,447
32,201 Tandy Corp. ................................. 1,521,497
--------------
5,350,816
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Construction/Agricultural
Equipment/Trucks (0.4%)
12,368 Case Corp. .................................. $ 610,670
59,202 Caterpillar, Inc. ........................... 3,352,313
6,936 Cummins Engine Co., Inc. .................... 410,958
38,552 Deere & Co. ................................. 1,498,709
1,377 NACCO Industries, Inc. (Class A) ............ 107,234
11,006 Navistar International Corp.* ............... 535,167
13,012 PACCAR, Inc. ................................ 714,033
--------------
7,229,084
--------------
Consumer Electronics/Appliances (0.1%)
14,711 Maytag Corp. ................................ 921,276
12,528 Whirlpool Corp. ............................. 885,573
--------------
1,806,849
--------------
Consumer Specialties (0.0%)
5,868 Jostens, Inc. ............................... 118,093
--------------
Consumer Sundries (0.0%)
11,214 American Greetings Corp. (Class A) .......... 310,488
--------------
Containers/Packaging (0.2%)
5,177 Ball Corp. .................................. 232,641
8,703 Bemis Company, Inc. ......................... 330,170
20,356 Crown Cork & Seal Co., Inc. ................. 540,706
25,933 Owens-Illinois, Inc.* ....................... 641,842
13,893 Sealed Air Corp.* ........................... 816,214
9,269 Temple-Inland, Inc. ......................... 574,678
--------------
3,136,251
--------------
Contract Drilling (0.0%)
8,351 Helmerich & Payne, Inc. ..................... 230,174
14,034 Rowan Companies, Inc.* ...................... 261,383
--------------
491,557
--------------
Department Stores (0.5%)
17,790 Dillard's, Inc. (Class A) ................... 418,065
34,703 Federated Department Stores, Inc.* 1,596,338
27,072 Kohl's Corp.* ............................... 1,928,880
55,595 May Department Stores Co. ................... 2,171,680
43,848 Penney (J.C.) Co., Inc. ..................... 1,589,490
63,381 Sears, Roebuck & Co. ........................ 2,376,787
--------------
10,081,240
--------------
Discount Chains (2.3%)
18,218 Consolidated Stores Corp.* .................. 293,765
36,546 Costco Wholesale Corp.* ..................... 2,729,529
73,653 Dayton Hudson Corp. ......................... 4,271,874
36,805 Dollar General Corp. ........................ 956,930
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
82,370 Kmart Corp.* ........................... $ 1,034,773
740,409 Wal-Mart Stores, Inc. .................. 32,809,374
--------------
42,096,245
--------------
Diversified Commercial Services (0.1%)
40,921 Paychex, Inc. .......................... 1,202,054
--------------
Diversified Electronic Products (0.2%)
13,266 Harris Corp. ........................... 348,232
20,981 Honeywell, Inc. ........................ 2,381,343
31,678 Rockwell International Corp. ........... 1,872,962
--------------
4,602,537
--------------
Diversified Financial Services (2.0%)
74,962 American Express Co. ................... 10,307,275
562,217 Citigroup, Inc. ........................ 24,983,518
23,669 Providian Financial Corp. .............. 1,837,306
--------------
37,128,099
--------------
Diversified Manufacturing (1.7%)
32,063 Allegheny Teledyne Inc. ................ 599,177
91,956 AlliedSignal, Inc. ..................... 5,632,305
15,706 Cooper Industries, Inc. ................ 814,749
22,529 Danaher Corp. .......................... 1,323,579
35,502 Dover Corp. ............................ 1,373,484
14,627 ITT Industries, Inc. ................... 494,575
66,991 Minnesota Mining &
Manufacturing Co. .................... 6,330,649
26,269 Thermo Electron Corp.* ................. 417,020
139,513 Tyco International Ltd. (Bermuda) ...... 14,134,439
--------------
31,119,977
--------------
Drugstore Chains (0.4%)
65,027 CVS Corp. .............................. 2,710,813
6,634 Longs Drug Stores Corp. ................ 208,556
43,073 Rite Aid Corp. ......................... 796,850
166,643 Walgreen Co. ........................... 3,864,035
--------------
7,580,254
--------------
E.D.P. Peripherals (0.7%)
168,431 EMC Corp.* ............................. 10,105,860
21,400 Lexmark International Group, Inc.
(Class A)* ........................... 1,685,250
11,962 Network Appliance, Inc.* ............... 785,754
37,054 Seagate Technology, Inc.* .............. 1,229,730
--------------
13,806,594
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -------------------
<S> <C> <C>
E.D.P. Services (0.8%)
102,946 Automatic Data Processing, Inc. ........ $ 4,047,065
24,024 Ceridian Corp.* ........................ 672,672
26,423 Computer Sciences Corp.* ............... 1,828,141
81,896 Electronic Data Systems Corp. .......... 4,596,413
71,862 First Data Corp. ....................... 3,161,928
--------------
14,306,219
--------------
Electric Utilities (2.1%)
31,752 AES Corp. (The)* ....................... 1,926,949
22,830 Ameren Corp. ........................... 914,627
32,066 American Electric Power Co. ............ 1,164,397
25,605 Carolina Power & Light Co. ............. 931,382
35,375 Central & South West Corp. ............. 800,359
26,433 Cinergy Corp. .......................... 802,902
19,520 CMS Energy Corp. ....................... 772,260
37,807 Consolidated Edison, Inc. .............. 1,663,508
24,883 Constellation Energy Group, Inc. ....... 737,159
31,938 Dominion Resources, Inc. ............... 1,477,132
24,132 DTE Energy Co. ......................... 951,706
60,599 Duke Energy Corp. ...................... 3,484,442
57,768 Edison International ................... 1,465,863
41,056 Entergy Corp. .......................... 1,223,982
39,042 FirstEnergy Corp. ...................... 1,115,137
16,281 Florida Progress Corp. ................. 763,172
29,976 FPL Group, Inc. ........................ 1,618,704
20,912 GPU, Inc. .............................. 713,622
19,125 New Century Energies, Inc. ............. 690,891
31,174 Niagara Mohawk Holdings Inc. ........... 471,507
25,557 Northern States Power Co. .............. 602,187
49,470 PacifiCorp ............................. 1,011,043
31,914 PECO Energy Co. ........................ 1,296,506
63,818 PG & E Corp. ........................... 1,934,483
26,237 PP&L Resources, Inc. ................... 734,636
36,531 Public Service Enterprise Group,
Inc. ................................. 1,497,771
49,303 Reliant Energy, Inc. ................... 1,365,077
115,981 Southern Co. ........................... 3,138,736
46,695 Texas Utilities Co. .................... 1,888,229
36,139 Unicom Corp. ........................... 1,395,869
--------------
38,554,238
--------------
Electrical Products (0.3%)
72,416 Emerson Electric Co. ................... 4,535,052
9,461 Thomas & Betts Corp. ................... 425,745
--------------
4,960,797
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Electronic Components (0.2%)
13,692 Andrew Corp.* ............................ $ 239,610
44,510 Solectron Corp.* ......................... 3,482,907
--------------
3,722,517
--------------
Electronic Data Processing (5.4%)
26,457 Apple Computer, Inc.* .................... 1,724,666
282,845 Compaq Computer Corp. .................... 6,558,468
8,550 Data General Corp.* ...................... 157,641
421,968 Dell Computer Corp.* ..................... 20,597,313
26,043 Gateway, Inc. ............................ 2,524,543
168,875 Hewlett-Packard Co. ...................... 17,795,203
301,951 International Business Machines
Corp. .................................. 37,611,771
31,408 Silicon Graphics, Inc.* .................. 359,229
128,755 Sun Microsystems, Inc.* .................. 10,227,975
47,111 Unisys Corp.* ............................ 2,025,773
--------------
99,582,582
--------------
Electronic Production Equipment (0.3%)
62,055 Applied Materials, Inc.* ................. 4,405,905
14,668 KLA-Tencor Corp.* ........................ 921,334
--------------
5,327,239
--------------
Engineering & Construction (0.1%)
12,610 Fluor Corp. .............................. 521,739
6,881 Foster Wheeler Corp. ..................... 89,023
--------------
610,762
--------------
Environmental Services (0.1%)
31,200 Allied Waste Industries, Inc.* ........... 397,800
101,335 Waste Management, Inc. ................... 2,210,370
--------------
2,608,170
--------------
Farming/Seeds/Milling (0.2%)
102,741 Archer-Daniels-Midland Co. ............... 1,335,639
39,843 Pioneer Hi-Bred International, Inc. ...... 1,558,857
--------------
2,894,496
--------------
Finance Companies (1.6%)
121,140 Associates First Capital Corp.
(Class A) .............................. 4,156,616
32,862 Capital One Financial Corp. .............. 1,240,540
18,759 Countrywide Credit Industries, Inc. ...... 602,633
170,539 Fannie Mae ............................... 10,594,735
115,663 Freddie Mac .............................. 5,956,644
79,762 Household International, Inc. ............ 3,011,015
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -------------------
<S> <C> <C>
133,400 MBNA Corp. ............................... $ 3,293,312
27,099 SLM Holding Corp. ........................ 1,197,437
--------------
30,052,932
--------------
Financial Publishing/Services (0.2%)
27,295 Dun & Bradstreet Corp. ................... 714,788
24,033 Equifax, Inc. ............................ 733,007
32,910 McGraw-Hill Companies, Inc. .............. 1,701,036
--------------
3,148,831
--------------
Fluid Controls (0.1%)
18,056 Parker-Hannifin Corp. .................... 789,950
--------------
Food Chains (0.6%)
69,942 Albertson's, Inc. ........................ 3,352,845
6,469 Great Atlantic & Pacific Tea Co.,
Inc. ................................... 227,224
137,438 Kroger Co.* .............................. 3,178,254
82,624 Safeway Inc.* ............................ 3,847,180
24,727 Winn-Dixie Stores, Inc. .................. 840,718
--------------
11,446,221
--------------
Food Distributors (0.1%)
19,836 Supervalu, Inc. .......................... 446,310
55,067 SYSCO Corp. .............................. 1,796,561
--------------
2,242,871
--------------
Forest Products (0.2%)
28,557 Georgia-Pacific Corp. .................... 1,181,546
17,869 Louisiana-Pacific Corp. .................. 330,577
33,377 Weyerhaeuser Co. ......................... 1,877,456
--------------
3,389,579
--------------
Generic Drugs (0.1%)
15,914 Watson Pharmaceuticals, Inc.* ............ 570,915
--------------
Home Building (0.1%)
9,898 Centex Corp. ............................. 278,381
5,891 Fleetwood Enterprises, Inc. .............. 120,029
8,092 Kaufman & Broad Home Corp. ............... 165,380
7,307 Pulte Corp. .............................. 168,974
--------------
732,764
--------------
Home Furnishings (0.1%)
46,880 Newell Rubbermaid, Inc. .................. 1,922,080
9,734 Tupperware Corp. ......................... 219,623
--------------
2,141,703
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Hospital/Nursing Management (0.2%)
94,516 Columbia/HCA Healthcare Corp. ........... $ 2,327,457
18,473 HCR Manor Care, Inc. .................... 361,378
51,667 Tenet Healthcare Corp.* ................. 900,943
--------------
3,589,778
--------------
Hotels/Resorts (0.4%)
102,019 Carnival Corp. .......................... 4,558,974
42,970 Hilton Hotels Corp. ..................... 526,383
41,513 Marriott International, Inc.
(Class A) ............................. 1,421,820
--------------
6,507,177
--------------
Industrial Machinery/Components (0.3%)
41,672 Illinois Tool Works Inc. ................ 3,247,812
27,608 Ingersoll-Rand Co. ...................... 1,756,559
6,385 Milacron Inc. ........................... 114,930
--------------
5,119,301
--------------
Industrial Specialties (0.1%)
21,570 Ecolab, Inc. ............................ 810,223
7,341 Millipore Corp. ......................... 277,123
20,738 Pall Corp. .............................. 412,168
--------------
1,499,514
--------------
Insurance Brokers/Services (0.2%)
42,619 AON Corp. ............................... 1,422,409
43,797 Marsh & McLennan
Companies, Inc. ....................... 3,188,969
--------------
4,611,378
--------------
Integrated Oil Companies (5.2%)
15,035 Amerada Hess Corp. ...................... 933,110
53,566 Atlantic Richfield Co. .................. 4,710,460
109,037 Chevron Corp. ........................... 10,058,663
104,360 Conoco, Inc. (Class B) .................. 2,804,675
403,933 Exxon Corp. ............................. 31,860,215
14,371 Kerr-McGee Corp. ........................ 804,776
130,196 Mobil Corp. ............................. 13,328,816
42,012 Phillips Petroleum Co. .................. 2,142,612
356,766 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ......................... 22,074,896
89,261 Texaco, Inc. ............................ 5,668,074
40,292 Unocal Corp. ............................ 1,687,228
--------------
96,073,525
--------------
Internet Services (0.9%)
180,772 America Online, Inc.* ................... 16,506,743
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Investment Bankers/Brokers/
Services (1.1%)
19,372 Bear Stearns Companies, Inc. ............ $ 806,360
19,764 Lehman Brothers Holdings, Inc. .......... 1,062,315
61,204 Merrill Lynch & Co., Inc. ............... 4,567,349
94,932 Morgan Stanley Dean Witter & Co.
(Note 4) .............................. 8,146,352
24,298 Paine Webber Group, Inc. ................ 953,697
135,836 Schwab (Charles) Corp. .................. 5,365,522
--------------
20,901,595
--------------
Investment Managers (0.1%)
41,947 Franklin Resources, Inc. ................ 1,507,470
--------------
Life Insurance (0.4%)
41,744 American General Corp. .................. 2,963,824
53,826 Conseco, Inc. ........................... 1,291,824
17,632 Jefferson-Pilot Corp. ................... 1,176,936
33,332 Lincoln National Corp. .................. 1,562,438
--------------
6,995,022
--------------
Major Banks (5.3%)
290,311 Bank of America Corp. ................... 17,563,816
126,661 Bank of New York Co., Inc. .............. 4,528,131
196,488 Bank One Corp. .......................... 7,884,081
49,378 BankBoston Corp. ........................ 2,292,991
52,308 BB&T Corp. .............................. 1,752,318
140,635 Chase Manhattan Corp. (The) ............. 11,769,392
25,995 Comerica, Inc. .......................... 1,353,365
161,038 First Union Corp. ....................... 6,683,077
94,904 Fleet Financial Group, Inc. ............. 3,778,366
38,437 Huntington Bancshares, Inc. ............. 1,148,305
74,514 KeyCorp ................................. 2,160,906
86,694 Mellon Bank Corp. ....................... 2,893,412
29,510 Morgan (J.P.) & Co., Inc. ............... 3,812,323
104,626 National City Corp. ..................... 2,890,293
50,579 PNC Bank Corp. .......................... 2,645,914
17,502 Republic New York Corp. ................. 1,214,201
27,839 SouthTrust Corp. ........................ 981,325
26,800 State Street Corp. ...................... 1,604,650
28,493 Summit Bancorp. ......................... 950,954
53,502 SunTrust Banks, Inc. .................... 3,440,847
120,942 U.S. Bancorp ............................ 3,734,084
33,758 Wachovia Corp. .......................... 2,645,783
274,996 Wells Fargo & Co. ....................... 10,948,278
--------------
98,676,812
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -------------
<S> <C> <C>
Major Chemicals (1.2%)
36,555 Dow Chemical Co. ........................ $ 4,153,562
162,962 Du Pont (E.I.) de Nemours & Co.,
Inc. .................................. 10,327,717
13,007 Eastman Chemical Co. .................... 604,013
16,768 Hercules, Inc. .......................... 546,008
105,063 Monsanto Co. ............................ 4,314,149
35,339 Rohm & Haas Co. ......................... 1,320,795
22,112 Union Carbide Corp. ..................... 1,257,620
--------------
22,523,864
--------------
Major Pharmaceuticals (8.5%)
252,963 Abbott Laboratories ..................... 10,972,270
217,903 American Home Products Corp. ............ 9,042,975
330,402 Bristol-Myers Squibb Co. ................ 23,252,041
223,813 Johnson & Johnson ....................... 22,884,879
183,164 Lilly (Eli) & Co. ....................... 13,668,614
392,746 Merck & Co., Inc. ....................... 26,387,622
646,019 Pfizer, Inc. ............................ 24,387,217
84,314 Pharmacia & Upjohn, Inc. ................ 4,405,407
244,929 Schering-Plough Corp. ................... 12,874,081
141,528 Warner-Lambert Co. ...................... 9,376,230
--------------
157,251,336
--------------
Major U.S. Telecommunications (7.0%)
50,782 ALLTEL Corp. ............................ 3,434,133
182,851 Ameritech Corp. ......................... 11,542,469
529,435 AT&T Corp. .............................. 23,824,575
258,268 Bell Atlantic Corp. ..................... 15,818,915
315,132 BellSouth Corp. ......................... 14,259,723
161,674 GTE Corp. ............................... 11,094,878
309,575 MCI WorldCom, Inc. ...................... 23,430,958
326,742 SBC Communications, Inc. ................ 15,683,616
143,933 Sprint Corp. (FON Group) ................ 6,387,027
83,788 U.S. West, Inc. ......................... 4,377,923
--------------
129,854,217
--------------
Managed Health Care (0.3%)
23,457 Aetna Inc. .............................. 1,823,782
27,880 Humana, Inc.* ........................... 252,663
28,807 United HealthCare Corp. ................. 1,751,826
11,230 Wellpoint Health Networks, Inc.* ........ 818,386
--------------
4,646,657
--------------
Meat/Poultry/Fish (0.1%)
81,228 ConAgra, Inc. ........................... 1,990,086
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- ---------------
<S> <C> <C>
Media Conglomerates (1.4%)
342,626 Disney (Walt) Co. ......................... $ 9,507,872
198,465 Time Warner Inc. .......................... 11,771,455
114,869 Viacom, Inc. (Class B)* ................... 4,831,677
--------------
26,111,004
--------------
Medical Equipment & Supplies (0.4%)
97,196 Medtronic, Inc. ........................... 7,605,587
--------------
Medical Specialties (0.7%)
16,773 ALZA Corp. (Class A)* ..................... 844,940
8,551 Bard (C.R.), Inc. ......................... 398,690
9,491 Bausch & Lomb, Inc. ....................... 626,999
48,515 Baxter International, Inc. ................ 3,253,537
41,547 Becton, Dickinson & Co. ................... 1,168,509
18,704 Biomet, Inc. .............................. 667,499
65,830 Boston Scientific Corp.* .................. 2,234,106
50,269 Guidant Corp. ............................. 2,950,162
11,813 Mallinckrodt, Inc. ........................ 378,754
14,020 St. Jude Medical, Inc.* ................... 508,225
--------------
13,031,421
--------------
Medical/Dental Distributors (0.2%)
45,330 Cardinal Health, Inc. ..................... 2,889,788
46,087 McKesson HBOC, Inc. ....................... 1,434,458
--------------
4,324,246
--------------
Medical/Nursing Services (0.1%)
69,002 Healthsouth Corp.* ........................ 564,954
--------------
Metals Fabrications (0.0%)
10,453 Timken Co. (The) .......................... 183,581
--------------
Mid-Sized Banks (0.7%)
29,325 Amsouth Bancorporation .................... 641,484
44,703 Fifth Third Bancorp ....................... 2,950,398
110,047 Firstar Corp. ............................. 2,950,635
26,277 Mercantile Bancorporation, Inc. ........... 1,450,162
18,574 Northern Trust Corp. ...................... 1,569,503
37,279 Regions Financial Corp. ................... 1,311,755
45,099 Synovus Financial Corp. ................... 851,244
23,729 Union Planters Corp. ...................... 1,001,067
--------------
12,726,248
--------------
Military/Gov't/Technical (0.3%)
7,523 EG & G, Inc. .............................. 239,325
33,121 General Dynamics Corp. .................... 2,086,623
55,925 Raytheon Co. (Class B) .................... 3,809,891
--------------
6,135,839
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -----------------
<S> <C> <C>
Motor Vehicles (1.0%)
201,447 Ford Motor Co. .......................... $ 10,500,425
107,879 General Motors Corp. .................... 7,133,499
--------------
17,633,924
--------------
Movies/Entertainment (0.2%)
11,770 King World Productions Inc.* ............ 448,731
71,213 Seagram Co. Ltd. (Canada) ............... 3,778,740
--------------
4,227,471
--------------
Multi-Line Insurance (1.8%)
134,265 Allstate Corp. .......................... 4,405,570
257,648 American International Group, Inc. ...... 23,880,749
33,852 CIGNA Corp. ............................. 3,040,333
37,757 Hartford Financial Services Group,
Inc. .................................. 1,715,584
22,682 Safeco Corp. ............................ 803,793
--------------
33,846,029
--------------
Multi-Sector Companies (3.5%)
11,313 Crane Co. ............................... 272,219
27,796 Fortune Brands, Inc. .................... 1,042,350
544,372 General Electric Co.** .................. 61,139,780
9,836 McDermott International, Inc. ........... 221,925
6,901 National Service Industries, Inc. ....... 220,832
28,295 Tenneco, Inc. ........................... 569,437
25,087 Textron, Inc. ........................... 2,025,775
--------------
65,492,318
--------------
Natural Gas (0.1%)
15,928 Consolidated Natural Gas Co. ............ 1,014,415
3,823 Eastern Enterprises ..................... 171,796
7,883 Nicor Inc. .............................. 304,974
5,345 ONEOK, Inc. ............................. 166,029
5,994 Peoples Energy Corp. .................... 218,406
39,951 Sempra Energy ........................... 891,407
--------------
2,767,027
--------------
Newspapers (0.4%)
15,071 Dow Jones & Co., Inc. ................... 757,318
46,484 Gannett Co., Inc. ....................... 3,158,007
13,115 Knight-Ridder, Inc. ..................... 707,390
29,366 New York Times Co. (The)
(Class A) ............................. 1,147,109
11,965 Times Mirror Co. (Class A) .............. 690,979
19,716 Tribune Co. ............................. 1,839,749
--------------
8,300,552
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Office Equipment/Supplies (0.5%)
18,920 Avery Dennison Corp. .................... $ 1,038,235
44,691 Pitney Bowes, Inc. ...................... 2,636,769
110,028 Xerox Corp. ............................. 5,253,837
--------------
8,928,841
--------------
Oil & Gas Production (0.3%)
20,128 Anardarko Petroleum Corp. ............... 684,352
18,605 Apache Corp. ............................ 846,528
29,507 Burlington Resources, Inc. .............. 1,233,761
57,899 Occidental Petroleum Corp. .............. 1,255,685
41,952 Union Pacific Resources Group, Inc. 752,514
--------------
4,772,840
--------------
Oil Refining/Marketing (0.1%)
12,174 Ashland, Inc. ........................... 469,460
15,048 Sunoco, Inc. ............................ 490,001
51,353 USX-Marathon Group ...................... 1,598,362
--------------
2,557,823
--------------
Oil/Gas Transmission (0.6%)
35,474 Coastal Corp. ........................... 1,536,468
13,758 Columbia Energy Group ................... 812,582
117,672 Enron Corp. ............................. 4,927,515
18,312 Sonat, Inc. ............................. 661,521
71,940 Williams Companies, Inc. ................ 2,967,525
--------------
10,905,611
--------------
Oilfield Services/Equipment (0.6%)
54,475 Baker Hughes Inc. ....................... 1,852,150
73,306 Halliburton Co. ......................... 3,399,566
91,013 Schlumberger, Ltd. ...................... 6,075,118
--------------
11,326,834
--------------
Other Consumer Services (0.2%)
16,172 Block (H.&R.), Inc. ..................... 899,568
119,471 Cendant Corp.* .......................... 2,143,011
45,252 Service Corp. International ............. 625,043
--------------
3,667,622
--------------
Other Metals/Minerals (0.1%)
6,713 ASARCO, Inc. ............................ 140,134
15,281 Cyprus Amax Minerals Co. ................ 258,822
27,197 Freeport-McMoran Copper & Gold,
Inc. (Class B) ........................ 436,852
31,938 Inco Ltd. (Canada) ...................... 654,729
9,646 Phelps Dodge Corp. ...................... 539,573
--------------
2,030,110
--------------
Other Pharmaceuticals (0.1%)
11,079 Allergan, Inc. .......................... 1,106,515
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- --------------
<S> <C> <C>
Other Specialty Stores (0.2%)
24,895 AutoZone, Inc.* ....................... $ 592,812
62,251 Office Depot, Inc.* ................... 649,745
8,938 Pep Boys-Manny, Moe & Jack ............ 130,160
77,335 Staples, Inc.* ........................ 1,677,203
41,350 Toys 'R' Us, Inc.* .................... 571,147
--------------
3,621,067
--------------
Other Telecommunications (0.1%)
23,180 CenturyTel, Inc. ...................... 911,264
28,813 Frontier Corp. ........................ 1,208,345
--------------
2,119,609
--------------
Other Transportation (0.0%)
54,931 Laidlaw, Inc. (Canada) ................ 343,319
--------------
Package Goods/Cosmetics (2.5%)
9,516 Alberto-Culver Co. (Class B) .......... 242,063
43,566 Avon Products, Inc. ................... 1,911,458
39,266 Clorox Co. ............................ 1,776,787
97,232 Colgate-Palmolive Co. ................. 5,201,912
184,535 Gillette Co. .......................... 8,603,944
17,644 International Flavors & Fragrances,
Inc. ................................ 718,993
88,583 Kimberly-Clark Corp. .................. 5,043,695
221,035 Procter & Gamble Co. .................. 21,937,724
--------------
45,436,576
--------------
Packaged Foods (1.4%)
46,493 Bestfoods ............................. 2,283,969
72,572 Campbell Soup Co. ..................... 3,206,775
25,428 General Mills, Inc. ................... 2,129,595
59,810 Heinz (H.J.) Co. ...................... 2,792,379
67,404 Kellogg Co. ........................... 2,397,055
22,437 Quaker Oats Company (The) ............. 1,499,072
54,191 Ralston-Ralston Purina Group .......... 1,490,253
150,320 Sara Lee Corp. ........................ 3,335,225
95,098 Unilever N.V. (Netherlands) ........... 6,549,875
--------------
25,684,198
--------------
Paints/Coatings (0.1%)
28,901 PPG Industries, Inc. .................. 1,735,866
28,301 Sherwin-Williams Co. .................. 689,837
--------------
2,425,703
--------------
Paper (0.4%)
9,405 Boise Cascade Corp. ................... 342,107
15,929 Champion International Corp. .......... 876,095
36,729 Fort James Corp. ...................... 1,184,510
68,302 International Paper Co. ............... 3,214,463
16,888 Mead Corp. ............................ 630,134
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------- -------------------
<S> <C> <C>
4,889 Potlatch Corp. ........................ $ 188,838
16,667 Westavaco Corp. ....................... 436,467
18,523 Willamette Industries, Inc. ........... 733,974
--------------
7,606,588
--------------
Photographic Products (0.2%)
53,526 Eastman Kodak Co. ..................... 3,930,816
7,468 Polaroid Corp. ........................ 202,570
--------------
4,133,386
--------------
Precious Metals (0.1%)
64,882 Barrick Gold Corp. (Canada) ........... 1,257,089
43,291 Homestake Mining Co. .................. 367,974
27,855 Newmont Mining Corp. .................. 569,287
54,152 Placer Dome Inc. (Canada) ............. 561,827
--------------
2,756,177
--------------
Precision Instruments (0.1%)
16,974 PE Corp-PE Biosystems Group ........... 1,168,023
7,918 Tektronix, Inc. ....................... 263,274
--------------
1,431,297
--------------
Printing/Forms (0.1%)
12,999 Deluxe Corp. .......................... 442,778
21,763 Donnelley (R.R.) & Sons Co. ........... 682,814
--------------
1,125,592
--------------
Property -- Casualty Insurers (0.4%)
27,379 Chubb Corp. ........................... 1,565,737
27,471 Cincinnati Financial Corp. ............ 1,088,538
18,176 Loews Corp. ........................... 1,426,816
12,129 Progressive Corp. ..................... 1,237,158
37,650 St. Paul Companies, Inc. .............. 1,207,153
--------------
6,525,402
--------------
Railroads (0.5%)
78,175 Burlington Northern Santa Fe Corp. 2,267,075
36,169 CSX Corp. ............................. 1,580,133
18,357 Kansas City Southern Industries,
Inc. ................................ 850,159
63,215 Norfolk Southern Corp. ................ 1,655,443
41,218 Union Pacific Corp. ................... 2,006,801
--------------
8,359,611
--------------
Recreational Products/Toys (0.1%)
15,295 Brunswick Corp. ....................... 390,978
32,517 Hasbro, Inc. .......................... 794,634
69,319 Mattel, Inc. .......................... 1,477,361
--------------
2,662,973
--------------
Rental/Leasing Companies (0.0%)
11,781 Ryder System, Inc. .................... 259,918
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- --------------
<S> <C> <C>
Restaurants (0.6%)
22,265 Darden Restaurants, Inc. .................... $ 347,891
225,934 McDonald's Corp. ............................ 9,348,019
25,545 Tricon Global Restaurants, Inc.* ............ 1,037,766
20,531 Wendy's International, Inc. ................. 574,868
--------------
11,308,544
--------------
Savings & Loan Associations (0.2%)
9,333 Golden West Financial Corp. ................. 847,553
98,971 Washington Mutual, Inc. ..................... 3,142,329
--------------
3,989,882
--------------
Semiconductors (3.3%)
24,389 Advanced Micro Devices, Inc.* ............... 504,547
552,046 Intel Corp. ................................. 45,371,281
23,801 LSI Logic Corp.* ............................ 1,350,707
41,661 Micron Technology, Inc.* .................... 3,106,348
27,947 National Semiconductor Corp.* ............... 787,756
130,434 Texas Instruments, Inc. ..................... 10,703,740
--------------
61,824,379
--------------
Services to the Health Industry (0.1%)
52,709 IMS Health Inc. ............................. 1,456,086
4,503 Shared Medical Systems Corp. ................ 253,012
--------------
1,709,098
--------------
Shoe Manufacturing (0.1%)
46,793 Nike, Inc. (Class B) ........................ 2,164,176
9,456 Reebok International Ltd.* .................. 111,699
--------------
2,275,875
--------------
Specialty Chemicals (0.2%)
38,152 Air Products & Chemicals, Inc. .............. 1,297,168
20,839 Engelhard Corp. ............................. 415,478
5,284 FMC Corp.* .................................. 307,793
11,505 Grace (W. R.) & Co. ......................... 220,033
9,721 Great Lakes Chemical Corp. .................. 400,384
26,233 Praxair, Inc. ............................... 1,232,951
16,768 Sigma-Aldrich Corp. ......................... 538,672
--------------
4,412,479
--------------
Specialty Foods/Candy (0.1%)
23,248 Hershey Foods Corp. ......................... 1,245,221
19,337 Wrigley (Wm.) Jr. Co. (Class A) ............. 1,514,329
--------------
2,759,550
--------------
Specialty Insurers (0.1%)
16,603 MBIA, Inc. .................................. 861,281
18,147 MGIC Investment Corp. ....................... 788,260
--------------
1,649,541
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- --------------
<S> <C> <C>
Specialty Steels (0.1%)
14,518 Nucor Corp. ................................. $ 675,994
--------------
Steel/Iron Ore (0.1%)
22,045 Bethlehem Steel Corp.* ...................... 169,471
14,702 USX-U.S. Steel Group ........................ 396,954
15,517 Worthington Industries, Inc. ................ 232,755
--------------
799,180
--------------
Telecommunications Equipment (3.5%)
22,420 ADC Telecommunications, Inc.* ............... 829,540
40,606 Corning Inc. ................................ 2,700,299
28,719 General Instrument Corp.* ................... 1,412,616
505,770 Lucent Technologies Inc. .................... 32,400,891
100,327 Motorola, Inc. .............................. 9,255,166
220,820 Nortel Networks Corp. (Canada) .............. 9,067,421
25,450 QUALCOMM Inc.* .............................. 4,889,581
12,425 Scientific-Atlanta, Inc. .................... 636,781
65,144 Tellabs, Inc.* .............................. 3,876,068
--------------
65,068,363
--------------
Textiles (0.0%)
3,015 Springs Industries, Inc. (Class A) .......... 113,251
--------------
Tobacco (0.9%)
54,043 Nabisco Group Holdings ...................... 959,263
401,431 Philip Morris Companies, Inc. ............... 15,028,573
29,299 UST, Inc. ................................... 928,412
--------------
16,916,248
--------------
Tools/Hardware (0.1%)
14,474 Black & Decker Corp. ........................ 761,694
3,934 Briggs & Stratton Corp. ..................... 239,482
10,913 Snap-On, Inc. ............................... 368,996
14,765 Stanley Works ............................... 389,427
--------------
1,759,599
--------------
Wholesale Distributors (0.1%)
15,526 Grainger (W.W.), Inc. ....................... 676,351
24,740 IKON Office Solutions, Inc. ................. 275,233
--------------
951,584
--------------
TOTAL COMMON STOCKS
(Identified Cost $1,543,015,474) ............ 1,803,634,331
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS August 31, 1999, continued
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------- -----------------
SHORT-TERM INVESTMENTS (2.1%)
U.S. GOVERNMENT AGENCY (a) (2.1%)
$ 38,600 Federal Home Loan Mortgage
Corp. 5.42% due 09/01/99
(Identified Cost $38,600,000) ...... $ 38,600,000
--------------
REPURCHASE AGREEMENT (0.0%)
110 The Bank of New York
5.50%due 09/01/99
(dated 08/31/99;
proceeds $110,231) (b)
(Identified Cost $110,214) ......... 110,214
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $38,710,214) ...... 38,710,214
--------------
TOTAL INVESTMENTS
(Identified Cost $1,581,725,688) (c) 99.8% 1,842,344,545
OTHER ASSETS IN EXCESS OF
LIABILITIES ........................ 0.2 4,086,504
----- -------------
NET ASSETS ......................... 100.0% $1,846,431,049
===== ==============
- --------------------------------
ADR American Depository Receipt.
* Non-income producing security.
** Some of this security is segregated in connection with open futures
contracts.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $572,363 U.S. Treasury Strip 0.00% due 08/15/25
valued at $112,418.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$323,331,278 and the aggregate gross unrealized depreciation is
$62,712,421, resulting in net unrealized appreciation of $260,618,857.
FUTURES CONTRACTS OPEN AT AUGUST 31, 1999:
UNDERLYING
DESCRIPTION, FACE
NUMBER OF DELIVERY YEAR, AMOUNT UNREALIZED
CONTRACTS AND MONTH AT VALUE LOSS
- ----------- ----------------- -------------- --------------
127 S&P 500 INDEX $41,903,650 $ (548,868)
SEPTEMBER/1999
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,581,725,688) ................................ $1,842,344,545
Receivable for:
Shares of beneficial interest sold ............................. 6,500,578
Dividends ...................................................... 2,422,084
Deferred organizational expenses .................................. 42,106
Prepaid expenses and other assets ................................. 402,871
---------------
TOTAL ASSETS ................................................... 1,851,712,184
---------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ...................... 2,565,586
Plan of distribution fee ....................................... 1,531,844
Investment management fee ...................................... 503,067
Variation margin on futures contracts .......................... 204,386
Accrued expenses and other payables ............................... 476,252
---------------
TOTAL LIABILITIES .............................................. 5,281,135
---------------
NET ASSETS ..................................................... $1,846,431,049
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $1,584,648,398
Net unrealized appreciation ....................................... 260,069,989
Accumulated undistributed net realized gain ....................... 1,712,662
---------------
NET ASSETS ..................................................... $1,846,431,049
==============
CLASS A SHARES:
Net Assets ........................................................ $99,139,730
Shares Outstanding (unlimited authorized, $.01 par value) ......... 7,054,284
NET ASSET VALUE PER SHARE ...................................... $14.05
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............... $14.83
======
CLASS B SHARES:
Net Assets ........................................................ $1,587,660,610
Shares Outstanding (unlimited authorized, $.01 par value) ......... 113,936,439
NET ASSET VALUE PER SHARE ...................................... $13.93
======
CLASS C SHARES:
Net Assets ........................................................ $143,092,122
Shares Outstanding (unlimited authorized, $.01 par value) ......... 10,269,102
NET ASSET VALUE PER SHARE ...................................... $13.93
======
CLASS D SHARES:
Net Assets ........................................................ $16,538,587
Shares Outstanding (unlimited authorized, $.01 par value) ......... 1,173,553
NET ASSET VALUE PER SHARE ...................................... $14.09
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended August 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $237,535 foreign withholding tax) ......... $ 18,026,678
Interest .................................................... 1,675,216
------------
TOTAL INCOME ............................................. 19,701,894
------------
EXPENSES
Plan of distribution fee (Class A shares) ................... 159,036
Plan of distribution fee (Class B shares) ................... 11,548,279
Plan of distribution fee (Class C shares) ................... 954,033
Investment management fee ................................... 5,404,027
Transfer agent fees and expenses ............................ 1,283,235
Custodian fees .............................................. 419,794
Registration fees ........................................... 418,012
Shareholder reports and notices ............................. 151,348
Professional fees ........................................... 68,020
Organizational expenses ..................................... 13,743
Trustees' fees and expenses ................................. 13,447
Other ....................................................... 150,168
------------
TOTAL EXPENSES ........................................... 20,583,142
Less: amounts waived/reimbursed ............................. (1,132,643)
------------
NET EXPENSES ............................................. 19,450,499
------------
NET INVESTMENT INCOME .................................... 251,395
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments .............................................. 1,267,925
Futures contracts ........................................ 1,782,281
------------
NET GAIN ................................................. 3,050,206
------------
Net change in unrealized appreciation/depreciation on:
Investments .............................................. 291,679,679
Futures contracts ........................................ 3,427,984
------------
NET APPRECIATION ......................................... 295,107,663
------------
NET GAIN ................................................. 298,157,869
------------
NET INCREASE ................................................ $298,409,264
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 251,395 $ 891,814
Net realized gain (loss) ............................. 3,050,206 (730,026)
Net change in unrealized depreciation ................ 295,107,663 (35,037,674)
-------------- ------------
NET INCREASE (DECREASE) ........................... 298,409,264 (34,875,886)
-------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares .................................... (286,359) (32,194)
Class B shares .................................... (612,696) (218,934)
Class C shares .................................... (55,326) (12,314)
Class D shares .................................... (139,228) (36,579)
Net realized gain
Class A shares .................................... (31,341) --
Class B shares .................................... (524,676) --
Class C shares .................................... (39,375) --
Class D shares .................................... (12,126) --
-------------- ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................. (1,701,127) (300,021)
-------------- ------------
Net increase from transactions in shares of beneficial
interest ........................................... 929,739,512 655,059,307
-------------- ------------
NET INCREASE ...................................... 1,226,447,649 619,883,400
NET ASSETS:
Beginning of period .................................. 619,983,400 100,000
-------------- ------------
END OF PERIOD
(Including undistributed net investment income of
$0 and $825,469, respectively) .................... $1,846,431,049 $619,983,400
============== ============
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter S&P 500 Index Fund (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
provide investment results that, before expenses, correspond to the total return
of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
The Fund seeks to achieve its objective by investing at least 80% of its total
assets in common stocks included in the S&P 500 Index in approximately the same
weighting as the Index. The Fund was organized as a Massachusetts business trust
on June 18, 1997 and had no operations other than those relating to
organizational matters and the issuance of 2,500 shares of beneficial interest
by each class for $25,000 of each class to Morgan Stanley Dean Witter Advisors
Inc. (the "Investment Manager") to effect the Fund's initial capitalization. The
Fund commenced operations on September 26, 1997.
The Fund offers four classes of shares. Class A shares, Class B shares, Class C
shares and Class D shares. The four classes are substantially the same except
that most Class A shares are subject to a sales charge imposed at the time of
purchase and some Class A shares, and most Class B shares and Class C shares are
subject to a contingent deferred sales charge imposed on shares redeemed within
one year, six years and one year, respectively. Class D shares are not subject
to a sales charge. Additionally, Class A shares, Class B shares and Class C
shares incur distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where a security is traded on more than one exchange, the security is
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by the Investment Manager that sale or bid prices are not reflective
of a security's market value, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Trustees (valuation of debt securities for which
market quotations are not readily available may be based
44
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999, continued
upon current market prices of securities which are comparable in coupon, rating
and maturity or an appropriate matrix utilizing similar factors); and (4)
short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FUTURES CONTRACTS -- A futures contract is an agreement between two parties
to buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirements of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net
45
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999, continued
investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized capital gains. To
the extent they exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital.
G. ORGANIZATIONAL EXPENSES -- The Investment Manager incurred the organizational
expenses of the Fund in the amount of approximately $68,000 and was reimbursed
for the full amount thereof. Such expenses have been deferred and are being
amortized on the straight-line method over a period not to exceed five years
from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.40% to the net assets of the Fund determined as of the close of
each business day. Effective May 1, 1999 the Agreement was amended to reduce the
annual rate to 0.375% of the portion of daily net assets exceeding $1.5 billion
but not exceeding $3 billion; and 0.35% of the portion of daily net assets in
excess of $3 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
The Investment Manager has agreed to assume all operating expenses (except for
Plan of Distribution fees) and to waive the compensation provided for in its
Investment Management Agreement to the extent that such expenses and
compensation on an annualized basis exceed 0.50% of the daily net assets of the
Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -- up
to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
average daily net assets of Class B; and (iii) Class C -- up to
46
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999, continued
1.0% of the average daily net assets of Class C. In the case of Class A shares,
amounts paid under the Plan are paid to the Distributor for services provided.
In the case of Class B and Class C shares, amounts paid under the Plan are paid
to the Distributor for (1) services provided and the expenses borne by it and
others in the distribution of the shares of these Classes, including the payment
of commissions for sales of these Classes and incentive compensation to, and
expenses of, the Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and (3) preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan, in the case of Class B
shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other selected broker-dealers for their
opportunity costs in advancing such amounts, which compensation would be in the
form of a carrying charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $46,739,132 at August 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended August 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.23% and
1.0%, respectively.
The Distributor has informed the Fund that for the year ended August 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $11,704, $2,206,303
and $78,362, respectively and received $546,251 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
47
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999, continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended August 31, 1999 aggregated
$984,816,849 and $59,981,251, respectively. Included in the aforementioned are
purchases and sales of common stock of Morgan Stanley Dean Witter & Co., an
affiliate of the Investment Manager and Distributor, of $4,198,694 and $139,660,
respectively, including a realized loss of $12,222.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $6,700.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 6,680,320 $ 86,767,191 4,387,871 $ 48,070,798
Reinvestment of dividends and distributions ......... 23,092 300,893 2,992 30,640
Redeemed ............................................ (2,469,479) (31,741,936) (1,573,012) (17,786,190)
---------- -------------- ---------- -------------
Net increase -- Class A ............................. 4,233,933 55,326,148 2,817,851 30,315,248
---------- -------------- ---------- -------------
CLASS B SHARES
Sold ................................................ 80,470,161 1,054,390,780 59,465,374 638,937,231
Reinvestment of dividends and distributions ......... 80,119 1,040,747 19,651 201,231
Redeemed ............................................ (19,572,235) (256,833,169) (6,529,131) (73,134,069)
----------- -------------- ---------- -------------
Net increase -- Class B ............................. 60,978,045 798,598,358 52,955,894 566,004,393
----------- -------------- ---------- -------------
CLASS C SHARES
Sold ................................................ 7,972,059 105,606,189 4,702,373 51,244,820
Reinvestment of dividends and distributions ......... 6,822 88,622 1,134 11,618
Redeemed ............................................ (1,731,053) (22,722,524) (684,733) (7,711,458)
----------- -------------- ---------- -------------
Net increase -- Class C ............................. 6,247,828 82,972,287 4,018,774 43,544,980
----------- -------------- ---------- -------------
CLASS D SHARES
Sold ................................................ 4,490,458 59,446,759 2,826,399 30,380,237
Reinvestment of dividends and distributions ......... 9,731 126,988 190 1,940
Redeemed ............................................ (4,717,139) (66,731,028) (1,438,586) (15,187,491)
----------- -------------- ---------- -------------
Net increase (decrease) -- Class D .................. (216,950) (7,157,281) 1,388,003 15,194,686
----------- -------------- ---------- -------------
Net increase in Fund ................................ 71,242,856 $ 929,739,512 61,180,522 $ 655,059,307
=========== ============== ========== =============
</TABLE>
- ---------------
* Commencement of operations.
48
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS August 31, 1999, continued
6. FEDERAL INCOME TAX STATUS
During the year ended August 31, 1999, the Fund utilized its net capital loss
carryover of approximately $289,000.
At August 31, 1999, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of open futures contracts and capital loss
deferrals on wash sales.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may purchase and sell stock index futures ("futures contracts") for the
following reasons: to simulate full investment in the S&P 500 Index while
retaining a cash balance for fund management purposes; to facilitate trading; to
reduce transaction costs; or to seek higher investment returns when a futures
contract is priced more attractively than stocks comprising the S&P 500 Index.
These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the value of the underlying securities.
At August 31, 1999, the Fund had outstanding futures contracts.
49
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $10.18 $10.00
------ ------
Income from investment operations:
Net investment income .......................... 0.10 0.10
Net realized and unrealized gain ............... 3.85 0.11
---- ----
Total income from investment operations ......... 3.95 0.21
---- ----
Less dividends and distributions from:
Net investment income .......................... (0.07) (0.03)
Net realized gain .............................. (0.01) --
----- ----
Total dividends and distributions ............... (0.08) (0.03)
----- -----
Net asset value, end of period .................. $14.05 $10.18
====== ======
TOTAL RETURN+ ................................... 38.82% 2.05%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.73%(3)(4) 0.75%(2)(3)
Net investment income ........................... 0.72%(3)(4) 0.91%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $99,140 $28,719
Portfolio turnover rate ......................... 5% 1%
</TABLE>
- -------------
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and net investment
income ratios would have been 0.81% and 0.64%, respectively, for the year
ended August 31, 1999 and 0.89% and 0.77%, respectively, for period ended
August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
------------------------ ----------------------
<S> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $10.13 $10.00
------ ------
Income (loss) from investment operations:
Net investment income (loss) ................... (0.01) 0.02
Net realized and unrealized gain ............... 3.83 0.12
------ ------
Total income from investment operations ......... 3.82 0.14
------ ------
Less dividends and distributions from:
Net investment income .......................... (0.01) (0.01)
Net realized gain .............................. (0.01) --
------ ------
Total dividends and distributions ............... (0.02) (0.01)
------ ------
Net asset value, end of period .................. $13.93 $10.13
====== ======
TOTAL RETURN+ ................................... 37.68% 1.38%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.50%(3)(4) 1.50%(2)(3)
Net investment income (loss) .................... (0.05)%(3)(4) 0.16%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $1,587,661 $536,349
Portfolio turnover rate ......................... 5% 1%
</TABLE>
- -------------
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and net investment
income ratios would have been 1.58% and (0.13)%, respectively, for the
year ended August 31, 1999 and 1.64% and 0.02%, respectively, for the
period ended August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $10.13 $10.00
------ ------
Income (loss) from investment operations:
Net investment income (loss) ................... (0.01) 0.02
Net realized and unrealized gain ............... 3.83 0.12
------ ------
Total income from investment operations ......... 3.82 0.14
------ ------
Less dividends and distributions from:
Net investment income .......................... (0.01) (0.01)
Net realized gain .............................. (0.01) --
------ ------
Total dividends and distributions ............... (0.02) (0.01)
------ ------
Net asset value, end of period .................. $13.93 $10.13
====== ======
TOTAL RETURN+ ................................... 37.70% 1.37%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.50%(3)(4) 1.50%(2)(3)
Net investment income (loss) .................... (0.05)%(3)(4) 0.16%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $143,092 $40,730
Portfolio turnover rate ......................... 5% 1%
</TABLE>
- -------------
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and net investment
income ratios would have been 1.58% and (0.13)%, respectively, for year
ended August 31, 1999 and 1.64% and 0.02%, respectively, for the period
ended August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 26, 1997*
ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998
---------------------- ----------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $10.20 $10.00
------ ------
Income from investment operations:
Net investment income .......................... 0.13 0.12
Net realized and unrealized gain ............... 3.85 0.11
------ ------
Total income from investment operations ......... 3.98 0.23
------ ------
Less dividends and distributions from:
Net investment income .......................... (0.08) (0.03)
Net realized gain .............................. (0.01) --
------ ------
Total dividends and distributions ............... (0.09) (0.03)
------ ------
Net asset value, end of period .................. $14.09 $10.20
======= =======
TOTAL RETURN+ ................................... 39.13% 2.30%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.50%(3)(4) 0.50%(2)(3)
Net investment income ........................... 0.95%(3)(4) 1.16%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $16,538 $14,186
Portfolio turnover rate ......................... 5% 1%
</TABLE>
- -------------
* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and net investment
income ratios would have been 0.58% and 0.87%, respectively, for the year
ended August 31, 1999 and 0.64% and 1.02%, respectively, for the period
ended August 31, 1998.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter S&P 500
Index Fund (the "Fund") at August 31, 1999, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period September 26, 1997
(commencement of operations) through August 31, 1998, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
October 11, 1999
1999 FEDERAL TAX NOTICE (unaudited)
During the fiscal year ended August 31, 1999, 100% of the income dividends
qualified for the dividends received deduction available to corporations.
54
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
PART C OTHER INFORMATION
Item 23. Exhibits
- -------- --------
1(a). Amended and Restated Declaration of Trust of the Registrant,
dated July 16, 1997, is incorporated by reference to Exhibit 1 of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 30, 1997.
1(b). Amendment, dated June 22, 1998, to the Declaration of Trust of
the Registrant is incorporated by reference to Exhibit 1 of
Post-Effective Amendment No. 3 to the Registration Statement on
Form N-1A, filed on October 30, 1998.
2. Amended and Restated By-Laws of the Registrant dated May 1, 1999,
is incorporated by reference to Exhibit 2 of Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A, filed
on August 31, 1999.
3. Not applicable.
4. Amended Investment Management Agreement between the Registrant
and Morgan Stanley Dean Witter Advisors Inc., dated May 1, 1999,
is incorporated by reference to Exhibit 4 of Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A, filed
on August 31, 1999.
5(a). Amended Distribution Agreement between the Registrant and Morgan
Stanley Dean Witter Distributors Inc., dated June 22, 1998, is
incorporated by reference to Exhibit 6 of Post-Effective
Amendment No. 3 to the Registration Statement on Form N-1A, filed
on October 30, 1998.
5(b). Selected Dealer Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc., dated July 28,
1997, is incorporated by reference to Exhibit 6(b) of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 30, 1997.
5(c). Omnibus Selected Dealer Agreement between Morgan Stanley Dean
Witter Distributors Inc. and National Financial Services
Corporation, dated October 17, 1998, is incorporated by reference
to Exhibit 5(c) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on August 31, 1999.
6. Not applicable.
7. Custodian Agreement between The Bank of New York and the
Registrant, dated July 23, 1997, is incorporated by reference to
Exhibit 8(a) of Pre-
<PAGE>
Effective Amendment No. 1 to the Registration Statement on Form
N-1A, filed on July 30, 1997.
8(a). Amended and Restated Transfer Agency Agreement between the
Registrant and Morgan Stanley Dean Witter Trust FSB, dated June
22, 1998, is incorporated by reference to Exhibit 8 of
Post-Effective Amendment No. 3 to the Registration Statement on
Form N-1A, filed on October 30, 1998.
8(b). Amended Services Agreement between Morgan Stanley Dean Witter
Advisors Inc. and Morgan Stanley Dean Witter Services Company
Inc., dated June 22, 1998, is incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed on August 31, 1999.
9(a). Opinion of Barry Fink, Esq., dated July 30, 1997, is incorporated
by reference to Exhibit 10(a) of Pre-Effective Amendment No.1 to
the Registration Statement on Form N-1A, filed on July 30, 1997.
9(b). Opinion of Lane Altman & Owens LLP, Massachusetts Counsel, dated
July 30, 1997, is incorporated by reference to Exhibit 10(b) of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 30, 1997.
10. Consent of Independent Accountants, filed herein.
11. Not applicable.
12. Not applicable.
13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1
between the Registrant and Morgan Stanley Dean Witter Distributors
Inc., dated July 23, 1997, is incorporated by reference to Exhibit
15 of Pre-Effective Amendment No. 1 to the Registration Statement
on Form N-1A, filed on July 30, 1997.
14. Amended Multiple Class Plan Pursuant to Rule 18f-3 is incorporated
by reference to Exhibit 18 of Post-Effective Amendment No. 3 to
the Registration Statement on Form N-1A, filed on October 30,
1998.
Other. Powers of Attorney of Trustees are incorporated by reference to
Exhibit Other of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on July 30, 1997 and
Exhibit Other of Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on March 31, 1998.
<PAGE>
Item 24. Persons Controlled by or Under Common Control with the Fund.
None
Item 25. Indemnification.
Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under
Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's
trustees, officers, employees and agents is permitted if it is determined that
they acted under the belief that their actions were in or not opposed to the
best interest of the Registrant, and, with respect to any criminal proceeding,
they had reasonable cause to believe their conduct was not unlawful. In
addition, indemnification is permitted only if it is determined that the actions
in question did not render them liable by reason of willful misfeasance, bad
faith or gross negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the Registrant. Trustees,
officers, employees and agents will be indemnified for the expense of litigation
if it is determined that they are entitled to indemnification against any
liability established in such litigation. The Registrant may also advance money
for these expenses provided that they give their undertakings to repay the
Registrant unless their conduct is later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such trustee,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent with Release
11330 of the Securities and Exchange Commission under the Investment Company Act
of 1940, so long as the interpretation of Sections 17(h) and 17(i) of such Act
remains in effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant
<PAGE>
maintain insurance to indemnify any such person for any act for which Registrant
itself is not permitted to indemnify him.
Item 26. Business and Other Connections of Investment Advisor
See "The Fund and Its Management" in the Prospectus regarding the
business of the investment advisor. The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
Closed-End Investment Companies
- -------------------------------
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
Open-end Investment Companies
- -----------------------------
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
<PAGE>
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter Next Generation Trust
(45) Morgan Stanley Dean Witter North American Government Income Trust
(46) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(47) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(48) Morgan Stanley Dean Witter Real Estate Fund
(49) Morgan Stanley Dean Witter S&P 500 Index Fund
(50) Morgan Stanley Dean Witter S&P 500 Select Fund
(51) Morgan Stanley Dean Witter Select Dimensions Investment Series
(52) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(53) Morgan Stanley Dean Witter Short-Term Bond Fund
(54) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(55) Morgan Stanley Dean Witter Small Cap Growth Fund
(56) Morgan Stanley Dean Witter Special Value Fund
(57) Morgan Stanley Dean Witter Strategist Fund
(58) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(59) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(60) Morgan Stanley Dean Witter Total Market Index Fund
(61) Morgan Stanley Dean Witter Total Return Trust
(62) Morgan Stanley Dean Witter U.S. Government Money Market Trust
<PAGE>
(63) Morgan Stanley Dean Witter U.S. Government Securities Trust
(64) Morgan Stanley Dean Witter Utilities Fund
(65) Morgan Stanley Dean Witter Value-Added Market Series
(66) Morgan Stanley Dean Witter Value Fund
(67) Morgan Stanley Dean Witter Variable Investment Series
(68) Morgan Stanley Dean Witter World Wide Income Trust
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and Director
Director of Morgan Stanley Dean Witter Distributors Inc. ("MSDW
Distributors") and Morgan Stanley Dean
Witter Trust FSB ("MSDW Trust"); President,
Chief Executive Officer and Director of
Morgan Stanley Dean Witter Services Company
Inc. ("MSDW Services"); President of the
Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series; Executive
Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various
MSDW subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds
Executive Vice President and Discover Brokerage Index Series; Director of MSDW
and Chief Investment Trust.
Officer
Ronald E. Robison President MSDW Trust; , Chief
Executive Vice President Administrative Officer and Director of MSDW Services;
Chief Administrative Vice President of the Morgan Stanley Dean Witter Funds
Officer and Director and Discover Brokerage Index Series.
Edward C. Oelsner, III
Executive Vice President
Barry Fink Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary, General Counsel and Director of MSDW
Secretary, General Services; Senior Vice President, Assistant Secretary and
Counsel and Director Assistant General Counsel of MSDW Distributors; Vice
President, Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds and Discover Brokerage Index
Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds
and Discover Brokerage Index Series.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds and Discover Brokerage Index Series.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group
Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
Group
Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
James Solloway
Senior Vice President
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
and Income Group
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and
Treasurer Accounting Officer of the Morgan Stanley Dean Witter
Funds and Discover Brokerage Index Series.
Thomas Chronert
First Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors, the Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
President and Controller and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors, the
and Assistant Secretary Morgan Stanley Dean Witter Funds and Discover Brokerage
Index Series.
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Andrew Arbenz
Vice President
Joseph Arcieri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty Vice President of Morgan Stanley Dean Witter Prime
Vice President Income Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Trey Hancock
Vice President
Matthew Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover Brokerage
Index Series.
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Albert McGarity
Vice President
Teresa McRoberts Vice President of Morgan Stanley Dean Witter S&P 500
Vice President Select Fund.
Mark Mitchell
Vice President
Julie Morrone Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Richard Norris
Vice President
Anne Pickrell
Vice President
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carl F. Sadler
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Marybeth Swisher
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
David Walsh
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
The principal address of MSDW Advisors, MSDW Services, MSDW
Distributors, DWR, the Morgan Stanley Dean Witter Funds and Discover Brokerage
Index Series is Two World Trade Center, New York, New York 10048. The principal
address of MSDW is 1585 Broadway, New York, New York 10036. The principal
address of MSDW Trust is 2 Harborside Financial Center, Jersey City, New Jersey
07311.
Item 27. Principal Underwriters
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
<PAGE>
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter Next Generation Trust
(45) Morgan Stanley Dean Witter North American Government Income Trust
(46) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(47) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(48) Morgan Stanley Dean Witter Prime Income Trust
(49) Morgan Stanley Dean Witter Real Estate Fund
(50) Morgan Stanley Dean Witter S&P 500 Index Fund
(51) Morgan Stanley Dean Witter S&P 500 Select Fund
(52) Morgan Stanley Dean Witter Short-Term Bond Fund
(53) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(54) Morgan Stanley Dean Witter Small Cap Growth Fund
(55) Morgan Stanley Dean Witter Special Value Fund
(56) Morgan Stanley Dean Witter Strategist Fund
(57) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(58) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(59) Morgan Stanley Dean Witter Total Market Index Fund
(60) Morgan Stanley Dean Witter Total Return Trust
(61) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(62) Morgan Stanley Dean Witter U.S. Government Securities Trust
(63) Morgan Stanley Dean Witter Utilities Fund
(64) Morgan Stanley Dean Witter Value-Added Market Series
(65) Morgan Stanley Dean Witter Value Fund
(66) Morgan Stanley Dean Witter Variable Investment Series
(67) Morgan Stanley Dean Witter World Wide Income Trust
<PAGE>
(b) The following information is given regarding directors and officers of MSDW
Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than Mr.
Purcell, who is a Trustee of the Registrant, none of the following persons has
any position or office with the Registrant.
Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and
Chief Compliance Officer.
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. Management Services
Registrant is not a party to any such management-related service contract.
Item 30. Undertakings
Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York on the 29th day of October, 1999.
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
By: /s/ Barry Fink
--------------------------------
Barry Fink
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 6 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer Chairman, Chief Executive Officer,
and Trustee
By: /s/ Charles A. Fiumefreddo 10/29/99
-------------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By: /s/ Thomas F. Caloia 10/29/99
-------------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By: /s/ Barry Fink 10/29/99
-------------------------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By: /s/ David M. Butowsky 10/29/99
-------------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 INDEX FUND
EXHIBIT INDEX
10. Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 6 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
October 11, 1999, relating to the financial statements and financial highlights
of Morgan Stanley Dean Witter S&P 500 Index Fund, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings "Custodian
and Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial Highlights"
in such Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
October 29, 1999